- September 15, 2022
- Foreclosure
Since 2009, when we first started helping consumers conquer their debt issues, we have seen so many lives affected by the changing landscape of mortgages and homeownership in the United States.
The good news is that foreclosure problems don’t have to mar the rest of your life. Indianapolis consumer debt attorney Jerry E. Smith can help you make it through a seemingly impossible mess, as he has for thousands of other clients.
The road to the resolution of your problems may be long, or it may be much shorter than you ever imagined. Either way, we can make it to the end together.
Foreclosure Basics
How Long Does a Foreclosure Stay on Your Credit Report?
At its most basic levels, foreclosure is simply the lender taking possession of a home, most often due to a mortgage in default. If you are dealing with a foreclosure, you may know that the whole affair is much more complicated. But at its essence, the lender, usually a bank, goes through specific legal steps to acquire the house and subsequently sell it.
Timing
Foreclosures aren’t immediate. There is a process that lenders must go through, which takes time and involves numerous mandated legal procedures. Before the foreclosure occurs, there is pre-foreclosure, which is the time when the borrower first starts missing payments. Borrowers receive late fees and notices during this period and are given a chance to keep their accounts up to date.
Once foreclosure becomes a reality, the lender must send the borrower a pre-foreclosure notice at least 30 days before action is taken. The notice will inform the borrower of many important things, such as:
- The fact of the default
- The existence of mortgage foreclosure prevention resources
- Their rights before the property is sold
- Warnings about predatory mortgage-help businesses.
After 30 days, the lender will file a foreclosure lawsuit. If the borrower does not answer, the lender will likely get a default judgment and sell the home. If the borrower does answer, litigation will occur, and a judge will issue a ruling.
In most cases, a foreclosure sale cannot occur until three months have elapsed since the lawsuit’s initial filing. Borrowers in the throes of foreclosure have options and benefit greatly from consulting with a consumer debt attorney experienced in foreclosures.
The Foreclosure Impact on Credit Reports
As you would imagine, a foreclosure will negatively affect your credit report, which will lead to a weakening of your overall power as a consumer. Since foreclosure is not the first step of a series of attempts by the lender to compel payment, it signifies severe delinquency and is reflected as such in your credit report.
Your credit score will drop considerably, potentially up to (and sometimes over) 100 points. Because you missed payments before the foreclosure, your score will have already dropped considerably.
Now, with a significantly lower credit score, the consumer world changes to a world with higher interest rates and frequent denial of consumer services once accessible, such as:
- Low-cost credit
- Consumer contracts, such as cellphone contracts
- Preferred status consumer benefits
- Access to rental homes.
Fortunately, there is no credit mountain so high that it can’t eventually be overcome. With an experienced foreclosure attorney handling your case, you will see the light at the end of the tunnel.
Frequently Asked Questions
Below, we have listed and answered some common foreclosure questions. We know the issues are complex and sometimes confusing and would like to help you in any way we can to understand what is happening and what your options might be.
Yes. You can avoid foreclosure. The best time to take steps to avoid a foreclosure is before going into default. Resources exist that may help you prevent your account from proceeding into default in the first place.
If you plan to ultimately stay in your home, the earlier you take corrective steps for your account, the less expensive, easier, and less damaging to your credit report it will be.
After the recession and mortgage crisis that ended around 2010, Congress and state legislatures significantly beefed up the rules and regulations surrounding mortgages and foreclosures.
They saw a need to protect vulnerable borrowers from unfair and unbalanced procedures and rules that favored lenders. Hence, there are several chances for borrowers to bring their accounts up to date.
If a foreclosure begins, there are ways you can stop it. The easiest way is to reinstate the loan by paying everything you owe up to the current date.
In many cases, this is not an option for struggling homeowners. However, if you can bring the loan up to date, you must make your payments to prevent the foreclosure from proceeding. You may also redeem the property, which entails paying the entire loan off before the sale occurs.
Another powerful tool for stopping foreclosure is bankruptcy. When you file a Chapter 7 or Chapter 13 bankruptcy, the sheriff must postpone the sale of the property.
The answer to the question “how long does a foreclosure stay on my credit report?” is typically for a period of seven years, starting from the date that you missed your first mortgage payment that led to the foreclosure.
It should be listed on your report anywhere from 30 to 60 days after the foreclosure. Usually, you can find the details of foreclosure in the public information section of your credit report, where information about tax liens, bankruptcies, and other similar information is usually found.
Yes. After seven years, you can have a foreclosure removed from your account. However, some may find that the foreclosure continues to be listed. When this occurs, you can write the three credit bureaus to have them remove the foreclosure.
Are you wondering, “Can you have a foreclosure removed from your credit report?” If it’s before the seven years is up, the answer is still “yes, it is possible” — but it’s difficult.
One way is to point out a material inaccuracy, such as a wrong foreclosure date or balance. Another way to have it removed from your credit report is to voluntarily transfer the deed to the lender, who will then dismiss the lawsuit. As you would imagine, you must make this transfer before the sheriff sells your house.
Yes. You can buy a house if you have a foreclosure on your credit report. How you go about doing this depends on the type of mortgage you get. Fannie Mae and Freddie Mac loans are the most restrictive and require you to wait seven years after your foreclosure to qualify for a loan.
So for these mortgage lenders, the answer to “can you buy a house if you have a foreclosure on your credit report?” is essentially “no.”
FHA and VA loans, however, are much less strict. With a Federal Housing Administration Loan, you must wait only three years, and with a Department of Veterans Affairs Loan, only two years. In some cases, these waiting periods may even be shorter.
Please reach out for answers to your questions. We take great care in ensuring our clients understand what is happening while we help them through their foreclosure issues.
Foreclosure has affected the lives of millions of Americans. So if you are dealing with one, you don’t have to face it alone. Call (317) 917-8680 today for help through this difficult time.
Why Choose Jerry E. Smith to Help You with Your Foreclosure?
Jerry E. Smith has dedicated his life to helping people get out from under the mountains of debt that have long impacted their lives and have prevented them from experiencing much of what life has to offer.
When you choose him to tackle your foreclosure issues, you can rest assured that he will explore every avenue to get you the relief you need.
Additionally, you can expect to be treated as a friend when bankruptcy lawyer Jerry E. Smith takes your case. You will never be made to feel anything less than an honored client.
Thanks to his CPA license, which he maintains in an active status, attorney Jerry E. Smith has insights into the financial workings that underlie foreclosures and uses his knowledge to better serve his clients.
If you are ready to take control of your foreclosure issue and start resolving it for good, please feel free to call our office at (317) 917-8680. We would love to discuss your case discreetly and confidentially and help you find a solution. We offer evening and weekend appointments to help accommodate your schedule and can provide you with same-day services for any tax-related needs you might have.
Attorney Jerry E. Smith
Attorney & CPA Jerry E. Smith practices bankruptcy law and tax resolution. Smith’s practice focuses on representing consumer debtors and assisting them in getting a fresh start by reorganizing or eliminating their debt and attempting to put them in the best financial position possible. Mr. Smith has been practicing law since March 1, 2009. Before that, he was and still is a real estate investor. He also previously worked as a Cost Accountant, Financial Analyst, and Internal Auditor for two large multi-billion-dollar international consumer product companies. [ Attorney Bio ]
