Questions About Credit Before & After A Foreclosure
Does anyone know if a bank's notice of foreclosure stays on your credit even if you're able to sell the house before the auction? I realize that if you can't sell and it goes to auction your credit is damaged for around 7 years. But what about if you're lucky enough to find a buyer so that the default judgement isn't fully carried out .. Perhaps only the late mortgage payments will show?
Some people say that loan officers only look at your previous two years of credit, so it doesnt really matter if you had a foreclosure 2+ years ago?
Finally- Is a bankruptcy as bad as a foreclosure on your credit, or worse?? I'm asking because I heard that a bankruptcy can defer a foreclosure for several months, which could be enough time to raise money to bring the mortgage current..
thx
if the house doesnt foreclose, all it would show on the credit report is the late payments on it and a
-0- balance or paid, that is if you sell prior to the auction....
bankrupty stays on your credit report for 10 years, foreclosure 7 years....
so for credit purposes,
its better to get rid of the property than letting it go to auction.Bankruptcy (ch.13)should be used if you are planning on keeping the property and can make the payments that the court imposes on you..usually over 5 years in monthly installments..Unfortunatelly, some debtors use the bankruptcy system to stall the auction and live in the house free for as long as they can. [ Edited by lp1 on Date 01/27/2004 ]
If the credit reporting agencies pick up that the property is in default it will be reported. Texas has a short 21 foreclosure period. That's probably too early for the credit bureaus to pick up that data. I'm sure it would appear on my reports at a later date.
This is really the last thing you should worry about. The report will show the mortgage pay history-the number of 30,60,90,etc day lates.
Regardless of BK, Foreclosure, etc if you restablish a good payment history after this is over you will be able to again get financing. Best of luck
.
This is getting into somewhat deeper territory- but what if a 'Short Sale' is negotiated and goes through with a subsequent purchase of the house, will the amount of the mortgage discounted for the Short Sale ALSO show up on a credit report? (i hope this makes sense) As in the difference of what was discounted- will the homeowner be liable for this amount? I think its called a "deficiency judgement".
In addition- i've heard that the homeowner can get an IRS 1099, regardless if the house goes into foreclosure and is sold at the courthouse OR whether it was sold to a buyer, after the buyer negotiated a Short Sale with their lender/bank... They would still be responsible for paying the taxes? How could they afford to do that if they couldn't even make the house payments to begin with? I guess i'm rather confused about the specifics ..
By the way thank you everybody for your kind assistance..
[ Edited by newincome on Date 01/27/2004 ][ Edited by newincome on Date 01/27/2004 ]
When we do a short sale we ALWAYS make it a requirement that the bank waive the deficiency judgement against the homeowner. It's the only way to really help the homeowner. If they end up with a judgement of 10's of thousands of dollars against them, they won't be able to get on with their life very easily. I understand that the banks can send a 1099 to the homeowner which they would need to report on their tax return, but don't know of any homeowners who have ever received one. (I think the paperwork just doesn't ever get done.)
As far as I'm aware, a short sale is not viewed as a foreclosure. A short sale is the bank accepting less than what is owed on the loan. They are accepting the offer, which means they are not expecting any other money. - They will not be going after the owner for the rest of the money - .
Ryan J. Schnabel
HELP!! Our home is in Forclosure, and the loan servicer is Fairbanks Capital; our original loan was $82,000 in 1999. In 2001 my company shut down all it's offices and I lost a $63,000/yr. job, was out of work for 8 months, and finally found a job at $30k/yr which I worked until I found a better job last year. Needless to say we got behind on mortgage payments, and finally ended up on foreclosure list last year; at that time we received a forebearance agreement from Fairbanks, but it doubled the payment and we ended up not able to keep it up so they foreclosed. The house is scheduled for sale Feb. 3; they are saying the loan is now $101,000. We saw a bankruptcy attorney yesterday and he was quite closed about any advice on what we should do, just directed toward Chapter 13...however, he said that our unsecured debt would be included in the court payments and estimates it along with the mortgage repay will be around $800/month - we couldn't afford the $1487 per month on the forebearance and I can't see how anything can change to make us able to pay even more. Our dream has turned to a nightmare, and I don't want to make it worse...we tried to sell our home last fall and no one bought, it does need new flooring, screens, new blinds, just alot of updates to make it sellable in this market, which we can't afford because of the high payments....what should we do? Any advice would be welcome - we are wanting to sell the home but were hoping to recoup some of our investment, but that's looking more and more insane - any advice?
for a short sale on a credit report it shows paid and or -0- balance...