What are the repercussions of foreclosure?

My credit scores are in the 640’s and 570’s so I’m not worried about ruining my credit. What I am worried about is what the lender will do as far as any assets I may have. Will they come after my savings? Will they sue me? Also, how long after can I attempt to buy again? (should I ever want to go through this again) I am not behind with my payments but am one “flat tire” away from not being able to make a payment. I can not apply for a loan modification unless I am in default. Basically, is it a really bad decision to foreclose on purpose?

Asked on October 26, 2011 under Real Estate Law, Connecticut

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

A foreclosure of one's property will definitely hurt one's credit score rating. Depending upon the type of loan one has that is evidenced by a promissory note secured by a mortgage or trust deed on the real property that you are writing about a lender may or may not go after the property owner for any shortfall between the amount owing on the loan and what the home sells for in the event of a foreclosure.

If the loan that is on your property is the original loan when purchased, it is called a "purchase money" loan. Many states in this country have laws preventing any deficiency judgment when a home has a purchase money loan in place if the event it is foreclosed upon.

I recommend that you consult with a real estate attorney experienced in home foreclosures concerning any additional questions that you may have.

Good luck.


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