What are the ramifications of foreclosure?

what-are-the-ramifications-of-foreclosureMany homeowners want to know the ramifications that a foreclosure will have on their credit and most importantly, their lives.

The facts are that a foreclosure is definitely not the end of the world and it isn’t really going to change your life that much in the long term. Yes, the short term effects will suck, but in the end you may just be better off.

Yeah, you heard it right, you just might find yourself in a better place, sleeping at night and living a more gratifying life because you’re not strapped to an unaffordable mortgage and home. But you’re still going to have to pay the piper in more ways then one for your new found debt free renting life.

What the piper says you’ll have to pay can be many things. For the most part a foreclosure on your permanent record means that you will have a black mark on your credit/financial profile. Anything you do in relation to a loan or applying for some type of credit will be affected by this foreclosure.

Many Americans are saying, ‘I’ll never buy a house, car or get a credit card ever again!” If that’s the case, the only other thing you will need to worry about is renting another home and a possible judgment brought against you by your lender. This possibly could result in a wage garnishment claim against you. But this is very rare that a lender will spend money in legal fees trying to collect from millions of Americans who have gone broke.

Before you accept that foreclosure as the only way out and start looking through the classified rent ads, consider trying to avoid it.

The first question you need to decide is whether you want to keep your house or give it up. If you want to keep it, you need to try to work out a loan modification to get back on track. This is the most common way to get back on track and an affordable payment. Some lenders will drop the rate down to 2-4% to help homeowners. If a 2-4% rate will help you, call your lender now or visit our 16,000 homeowners forum to get free mortgage help.

If you’re in over your head, have no job and or bought too much house, a loan modification probably isn’t going to help. So, please keep reading for some tips to help smooth the process.

Unfortunately, now you’re going to have to juggle the art of locating a home to rent while yours is being foreclosed on. Time is not on your side and the longer you wait, the more difficult renting will be. If you’re going to life with mom and pop, ride the foreclosure out till the end. Just make sure to check your states foreclosure laws and keep an eye on the sale of your home so you can time your departure just right.

Having a past foreclosure can make renting hard because landlords fear you might become late on the rent. Fortunately, you can still rent after a foreclosure.

Try looking for apartments or landlords that do no credit checks. Fortunately, foreclosure is the norm now. A lot of people have suffered one themselves or know someone who has. These people understand that bad things happen to good people and second chances+redmeption are the way to live life.

Large apartment complexes are typically owned by property management companies are going to have a strict approval criteria. You’re more likely to get a credit check at one of these complexes (and denied if you have a foreclosure) so don’t apply there.

Money talks and you know what walks. So save those Benjamin’s and dress to impress. Paying a higher security deposit may be your ticket to renting glory. Giving your landlord a high deposit lets them know you’re serious about paying your rent.

While you’re searching for that perfect new place to cal home, you still have to deal with reality and your current situation. So get educated on what you can do to help make your move easier.

You can also try something called a “deed in lieu of foreclosure”. This basically means you turn over your house to the lender and walk away without owing anything. But you’ll need to work this out with the lender and you can just send them a letter with your keys.

Banks do not like jingle mail. If you decide this is the route you would like to pursue, then I advise you seek a reputable attorney in your state that can assist you in dealing with your lender. You may also want to seek the advice of a tax attorney to determine if you may have tax issues in the future.

A good attorney who knows real estate and mortgage law can help. If you can’t afford an attorney, try your local bar and ask for a legal aid firm in your area or a non-profit HUD approved housing counselor. Mortgage servicers and lenders are more likely to work with a competent third party if you can’t get your items together during the process.

If all else fails, you may have to consider just moving to Costa Rica or Tahiti. If that’s too extreme maybe just allowing foreclosure to proceed and or filing for bankruptcy is the ticket to freedom.

The good news is that the ramifications of foreclosure aren’t too bad. Hell, you can’t go to jail, the bank can’t send thugs to your work to collect the mortgage and your life may just be better off.

Only you can decide the best course to take, but by all means, move ahead my friend and get going down that course!


4 Comments

4 Responses to “What are the ramifications of foreclosure?”

  1. pligg.com says:

    Loan Modification & Home Loan News…

    Many homeowners want to know the ramifications that a foreclosure will have on their credit and most importantly, their lives.

    The facts are that a foreclosure is definitely not the end of the world and it isn’t really going to change your life that…

  2. Duane says:

    After finding out that foreclosure has taken place, I came across this website during my search for rentals: Smart Solutions Financial Services, LLC. Do you have any scoop on them? Here’s their service offering:
    * The Rent To Own Homes Program Fee shall be paid by Tenant in valuable consideration for the following services to be provided in good faith by Smart Solutions Financial Services, LLC: (1) Assisting Tenant and/or Realtor® with negotiating a lease and/or purchase agreement with a Seller/Landlord even though Renter may have damaged credit and this service is normally NOT available to Renters with such a credit status; (2) Assisting the Tenant and/or Realtor® with securing a rent credit from the Seller/Landlord to help fund any down payment which may be required by either the Landlord/Seller and/or home loan provider – if possible (This is a POTENTIAL AVERAGE SAVINGS OF $100.00 – $500.00 per rental payment); (3) Assist the Tenant and/or Realtor® in negotiating with the Seller/Landlord a low or zero down payment and structuring the payment(s) of the down payment to meet the Tenant’s budget – if possible; (4) Assist the Tenant and/or Realtor® in obtaining a closing cost concession from the Landlord/Seller – if possible (This is a POTENTIAL AVERAGE SAVINGS OF $4,000.00 – $6,000.00 in closing costs concessions); (5) Negotiating a better purchase price with the seller – if possible (This is a POTENTIAL AVERAGE SAVINGS OF $5,000.00 – $15,000.00 in purchase savings).

  3. Christi says:

    Moe, I hope you see this – I’ve posted at the forums & have yet to receive any answers! Our auction date is 10/6/09. This is a FHA loan, and we do have PMI. We are in GA, which I know is a recourse state.

    We own another home, which we will be moving into on the foreclosure date.

    We are concerned that if they seek a judgment (which, it doesn’t seem like they will – and it would be the PMI company, right not the lender) they could force sale of our other home.

    Is it likely that we will have a deficiency judgment from PMI or FHA? If so, what does that mean for us?

  4. [...] end of this post. But if you just have a first mortgage and you decide to file, if is is before the foreclosure sale date, a bankruptcy will stop the foreclosure sale from taking place." From Will filing bankruptcy stop [...]