It can also be triggered if you have failed to do certain things like pay property taxes or maintain the house, which might include letting your homeowners insurance lapse or neglecting the structure of the home. After a homeowner misses three months of mortgage payments, the lender can record a public notice that the owner has defaulted on their mortgage and thus start the pre-foreclosure process.
The lender mails the notice of default—or lis pendens, depending on the state—to the homeowner, who has a grace period of another three months to bring the mortgage current or work out an arrangement with the lender. After those three months, the lender may publish for 21 days with variations depending on the state a notice of trustee sale and sell the home at auction. Once a borrower is in default, their lender can initiate one of three different types of foreclosures.
With the caveat that state laws and individual situations vary, here is a big-picture look at what you need to know about navigating the foreclosure process.
When you find yourself behind on your mortgage , the first thing you should do is reach out to your loan servicer. Depending on your situation and the reason for your financial woes, you might be a candidate for forbearance , which allows you to skip a mortgage payment or two and add the amount to the balance of your loan. Refinancing your mortgage at a lower interest rate might be a viable solution if you still have solid credit scores.
While some homeowners want to wipe their hands clean of their house as soon as they receive a foreclosure notice, others will cling to the property until the bitter end.
The process can be lengthy, so be careful when you choose to move out. For example, homeowners sometimes vacate early in the foreclosure process, only to find that months or even years later, the lender has not completed the trustee sale. If, however, the home is sold in a foreclosure or a short sale meaning the sale price is less than the amount the homeowner owes the lender , you will need to move out quickly—often with only five business days to vacate once the sale is complete. A counselor certified by the U.
Department of Housing and Urban Development HUD can walk you through your options and help you figure out how you got behind on your mortgage in the first place. Foreclosure is something no one—neither borrower nor lender—ever wants to go through. It's best avoided altogether, but if you can't get around it, you and your credit should eventually recover. What's on Your Credit Report? The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually.
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If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well. Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.
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Lenders don't like to give loans to people who haven't paid off their debts in the past. Consequently, a timeshare foreclosure might result in a higher rate of interest than the prevailing market rates or could result in you being denied credit in some circumstances.
In some cases, if your credit is bad enough, a credit card company might cut your credit line or close your existing account. A foreclosure entry appears on a credit report for seven years, but its impact on your FICO score will decrease as time passes.
If your timeshare does get foreclosed, it's recommended that you stay up-to-date on your other debts. By remaining current on other debts, your FICO score can start to recover more quickly. If you find a company that claims it can repair your credit following a timeshare foreclosure or home foreclosure , it very likely is a scam. You can't legally remove accurate information from your credit report until it becomes outdated , and even if the information is outdated, companies that claim they can do this aren't telling you the full story.
In many instances, credit repair companies simply write a letter to credit report agencies disputing any errors and outdated information, which is something you can easily do yourself. To learn about alternatives to avoid a timeshare foreclosure, see Options to Avoid a Timeshare Foreclosure. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.
The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service.
Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. A timeshare foreclosure will likely cause your credit score to drop, which can affect your ability to get credit in the future. Timeshare Foreclosures A timeshare is a form of shared property ownership where multiple owners get to use the property for a specified period each year.
A Lower Credit Score Affects Your Ability to Get Credit A timeshare foreclosure will not ruin your credit score forever, but it could have a significant impact on your ability to obtain another mortgage for up to seven years.
Avoid Credit Repair Scams If you find a company that claims it can repair your credit following a timeshare foreclosure or home foreclosure , it very likely is a scam.
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