Common Myths About Foreclosure

A large no:of myths are there regarding foreclosure. Some of them are here

Myth: The bank wants my house.

Truth: Banks never want your house. All they really want is the money that was given to you. They actually hate going through the foreclosure and might very often bend backwards to avoid a foreclosure. The flexibility of the bank may not suffice to stop a foreclosure, but do not be under the impression that the bank wants your house. Avoiding and ignoring the bank would only increase the possibilities of them knocking at your door.

Myth: The bank will not take payments. I am left with no options.

Truth: There are times when the bank specifies that if the debtor does not pay all the arrears in full, they will not accept partial payments. If this occurs, you will notice that after a month or so the bank sends back the payment and the 'all or nothing' requirement has increased. Do not be afraid! A mortgage negotiation professional is always there to mediate between you and the bank to stop the foreclosure. They set a small portion of the arrears that you have to pay. In addition, they also help you to pay for the remaining arrears. This could be months or even the loan duration or the loan extension period.

Myth: I will have to move out, since I received a foreclosure notice.

Truth: Almost all the states have a lengthy foreclosure process. You do not have to move out even though you failed to avoid foreclosure. A person is expected to go through an eviction process till he finally has to leave the premises. You need not hold on till the end, but ensure that you stay on and fight for as long as you can. Timely action would always ensure that you get through the foreclosure process easily, without losing the house.

Myth: Since I am in foreclosure, banks will not refinance me.

Truth: If an individual has enough equity, say about 60-70%, specialty lenders do refinance the house and help in paying up the bank, thus stopping the foreclosure.

Myth: Since I have undergone a foreclosure, I cannot buy a new house.

Truth: Foreclosure is considered the worst thing ever to appear on a credit report. In spite of this, many banks offer to loan money after foreclosure. Be ready to pay high interest rates and large down payments though. Very often the terms do not allow you to purchase any new real estate property or house. If you are able to spruce up the credit report by rebuilding the credit, you might just be lucky enough to approach a bank for a foreclosure.

Myth: Everyone will invade my house on the day of the auction.

Truth: No one is allowed to come inside the house without a court order. According to foreclosure rules, this can be done only if you invite the concerned people into the house.

Myth: Chapter 7 Bankruptcy would halt all bankruptcy operations and save my house.

Truth: Chapter 7 Bankruptcies stop home foreclosure only for the time being. Ultimately, you have to think of some alternative to pay back the loan and keep the house as well.