Post Foreclosure Options

Owning a home is perhaps the greatest asset one has. However, making payments from job loss, other loss of income, too much other debt and other unforeseeable circumstances may make paying a monthly mortgage impossible. This may eventually lead to foreclosure of the property. So, what are options after foreclosure? The options are limited and can be boiled down to two. These have to deal with the lender who foreclosed on the property and personal choice.

A foreclosure is a process where a given lender decides to recapture a property where payments cannot be made as agreed in a mortgage. Usually, it takes only a short period of time for an individual to default on payments (about three months). The mortgage then goes into arrears and the lender then starts the foreclosure process. As far as options after the foreclosure, as mentioned before, options are limited. When a home or other property is foreclosed, it usually is sold on the courthouse steps in the individuals’ county. At this point, the homeowner may want to bid on the home and make up the arrears. The only other option from a lender standpoint may be to sign a deed in lieu of foreclosure to avoid a derogatory item on an individuals’ credit report.

The second option deals with the homeowners themselves, which does not involve the lender. After a home is foreclosed, options are limited. The most widely used procedure is for an individual to claim bankruptcy. Although this limits future possibilities of owning a home, it eliminates outstanding mortgage payments due to the lender. In the long run, about three to for years, another home can be purchased through conventional means if good credit has been reestablished. Of course, in the meantime, another home can be purchased through owner financing and other creative methods.