How does a home foreclosure process work?

by oliver on September 30, 2010

Question:

How does a home foreclosure process work?

If someone with an A paper loan goes into foreclosure because their home is worth less than half the value of the mortgage therefore bank does not approve short sale, and they lost their job, how does the process work? This would be for CA. And how long does it stay on the credit report and would existing credit card rates go up?

Answer:

If your lender was not able to approve a short sale, there are still other options that you can do in order to avoid the foreclosure process. You can seek for refinancing, talk to your lender of forbearance, or apply for a home affordable loan modification. You can even file for a bankruptcy, if all else fails, in order to stop the process from taking action. If no option was made successful to prevent the foreclosure process, a notice of sale will already be sent to you. This notice contains the details of the location, date and time when your house will be sold to the public. A copy of the notice of sale will also be posted to the local newspaper to inform the people in your community of the upcoming sale. Since the foreclosure sale is done thru auction, the highest bidder will be the one who will take over or repossess the house. After the sale, the property is said to be completely foreclosed on.

The foreclosure can stay in your credit record for as long as seven years and can lower your credit score at least 200 to 300 points. Because of this decrease in your FICO score, the interest rates of your credit cards will definitely go up, in addition to your car insurance if you have any.

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