Home Foreclosure and Your Credit Report

Posted on June 5th, 2008 by saman

Presently there are many people who are unsure of what they can do when they are being faced with a foreclosure. These individuals need to be wary because there are many opportunists out there that will take advantage of them in their time of need.Also, without the right knowledge the person may be unclear on how a foreclosure affects their credit score.

It is believed that a “short sale” will save your credit.This is not actually the case. If you have received a foreclosure notice you know that you are already behind on your loan payments. It is unlikely that a bank will not put a late payment on your credit report.Those encouraging the short sale do not inform you that your credit is already in trouble whether you attempt a short sale or not.Signing a “deed” in place of foreclosure will affect you.

You can only keep a foreclosure from being put on your credit report if the lender or bank agrees to delete your previous payment history in writing.The lender or bank must also agree not to continue with foreclosure.This will keep the foreclosure out of official records and a “default judgment” will not be recorded.

If throughout a legal foreclosure proceeding, you do not defend your foreclosure by neglecting to give an answer to the complaint, then the bank or lender will get a “default judgment”.This will happen whether or not they have ownership of the note.If this is the case the judgment of default will be placed in public records and will remain there for several years. In the state of Florida a judgment of default can remain in the public records for twenty years.

Not behaving properly when it comes to foreclosure can come back to haunt you.Years after the foreclosure, you may be on the right track financially and even have a very good job.You may even be current on all of your bills. However, if you decide to buy another house and apply for new loan, the public records will be checked and the title company or under writer will most definitely find the judgment against you. You will have to pay the previous judgment if you hope to get another mortgage.

It is always a good idea to defend yourself during a foreclosure.If you don’t happen to have an attorney, you should still give an answer to the complaint.You should always answer the complaint within the allotted time that the plaintiff has allowed.It is not hard to answer a complaint.

If you are in negotiations with you bank or lender t get your home back in your possession or sell it in a short sale, you have to ensure that the bank or lender will not put the foreclosure on a credit report.The bank or lender must also agree to waive any shortfall on the loan.This will ensure that the bank or lender will not come back against you for a deficiency judgment.

It is important to do the appropriate research on foreclosures and how they can affect your credit and it is important to know your options.