What acutally happens when someone "defaults" on their mortgage, financial and credit rati

When someone defaults on a mortgage the lender forecloses on the property and takes it back.

They then sell the property at auction and if they sell it for at least what was owed you are in the clear, if however they take a loss on the property they will come after you for the balance. This is happening a lot due to property being appraised at more then it%26#039;s worth so people could get 100% ffinancing.

As far as your credit goes a foreclosure a repossession or a bankruptcy are the worst things that can happen as far as credit goes. Your score will drop 100-150 points overnight and it will make getting any other kind of loan next to impossible without making huge down payments and paying State maximum interest rates and fees for several years.

What acutally happens when someone %26quot;defaults%26quot; on their mortgage, financial and credit rating consequences?

A foreclosure usually stays on your credit for 10 years, not to mention immediately lowering your score, it could hinder everything you do for the next 10 years. You are better off, trying to work something out with the lender (with all the foreclosures the last thing they want is another home they have to try to sell) sell it yourself, even if you only get what you owe on it, its better than a foreclosure. If you are offered less than what you owe, you can negotiate a %26quot;short sale%26quot; where the lender takes less than is owed. You have several options, don%26#039;t just walk away.

What acutally happens when someone %26quot;defaults%26quot; on their mortgage, financial and credit rating consequences?

Foreclosure Overview

What is Foreclosure?

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways:

The borrower/owner reinstates the loan by paying off the default amount to during a grace period determined by state law. This grace period is also known as pre-foreclosure.

The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.

A third party buys the property at a public auction at the end of the pre-foreclosure period.

The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned or REO properties (Real Estate Owned by the lender).

This process allows for three opportunities for finding bargains on foreclosure homes.

Pre-Foreclosure (NOD, LIS):

Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts of 20-40 percent below market value.

More about pre-foreclosures

Auction (NTS, NFS):

If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.

More about auctions

Bank-owned (REO):

If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will then typically clear the title and perform needed maintenance and repair; however, the potential bargain for these REO homes is typically less than a pre-foreclosure or auction property. Bank foreclosures can become government foreclosures if the loan is backed by a government agency such as the Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA). In that case the government agency would be responsible for selling the property.

What acutally happens when someone %26quot;defaults%26quot; on their mortgage, financial and credit rating consequences?

Absolutely!!!

What acutally happens when someone %26quot;defaults%26quot; on their mortgage, financial and credit rating consequences?

Your credit rating goes straight in the toilet and stays there for quite a few years.In addition to that, you are liable for any difference between what you owe and what they resell it for.Good Luck