How to Stop a Foreclosure

Foreclosure will affect your life much longer than the actual process itself takes. The impact to your credit will remain for years after you've lost your home. Foreclosure is never a good option for homeowners who are falling behind on mortgage payments but, unfortunately, sometimes foreclosure becomes the only option.

If I Am Foreclosed on, What Happens to my Credit?

If foreclosure does happen, you can expect your credit score to plummet drastically and almost immediately. This creates a major obstacle to rebuilding your credit, because creditors will be reluctant to take on the risk of opening an account with someone who has defaulted on a loan as major as a home mortgage.

Facing foreclosure is a challenge, but not nearly as big as the daunting task of rebuilding your credit after foreclosure. Foreclosure will remain on your credit record for 7 years and will prevent you from obtaining another home loan for at least that long.

Negotiating to Prevent a Foreclosure

Loan modification is also a tool to help you recover from a close call, and involves adjusting the terms of your loan, such as interest rates and monthly payments, or could even mean adding missed payments to the "tail" of the mortgage.

Should I Do a Short Sale?

Some banks, in the interest of avoiding foreclosures with their properties, will agree to sell a house quickly for less than its market value. This is called a "short sale." It can stop foreclosure, but it's probably more beneficial to the bank than it is to you. It acts very similarly to a foreclosure in terms of reducing your credit score, though a short sale will mean that you could be eligible to buy a home again much sooner.

What to Expect with a Foreclosure

If you find there's absolutely nothing you can do to prevent foreclosure, then be prepared for the following process to unfold:

• The bank will send you a "Notice of Default" shortly after you miss your first payment - usually after 30 days.
• Shortly after this (at 60 days post missed payment), the lender will contact you to encourage any payment amount to help keep you current on your loan.
• After 90 days, foreclosure begins to look unstoppable as the option for the bank to foreclose on your property opens up.
• You may then find that, in as little as 180 days from your first missed payment, your property will go to auction. After that you have the option to either leave voluntarily or wait for eviction, which could take several weeks or several months to happen.

Can I Remove a Foreclosure from my Credit?

Foreclosure and its consequences don't necessarily have to haunt you and your credit for the next 7 years. If you've been through foreclosure, you may have options to improve your credit faster by having the foreclosure entry removed from your credit report. There are ways to legally and ethically challenge foreclosure items and rebuild your credit history.

Lexington Law and its team of legal experts specialize in removing questionable negative entries from credit reports; including foreclosure - and may be able to assist you in the case of foreclosure. This could put you on the path to home ownership again - and you won't have to wait years and years. Talk to a professional at Lexington Law today and find out what they can do to help.

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