What are the consequences of foreclosure?

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your credit is fricked

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I guess that depends on other factors. I've had 2 friends that had rental properties they allowed to be foreclosed on, and both were able to get mortgages on their primary homes a year or two later.

But yeah, it certainly doesn't help your credit.

You wont be able to get another mortgage for at least a year. FHA wont allow a mortgage for three years after a foreclosure, unless you can prove the loss was because of a loss of job or special circumstance (the even noted that inability to sell a home after a job transfer did not help shorten the 3 year period)

reading another article, you can get a 1 year wait on other loan types if you filed chapter 13, and have clean credit since....


Either way, you foreclose, you will be renting something for a 1 - 7 years....

I'm assuming the property is owned in your name, as well as the mortgage is in your name.

There are a few consequences.

1) Your credit score will go in the dump.

2) You won't be able to buy a new home for a period of 1-7 years. (That might not be an issue for you if you are already living somewhere else).

3) You may be sued for the difference between what the house sells for at the foreclosure auction, and the balance of the note.

4) If the bank writes off the difference, you may owe income tax on the difference. (You will have income on the amount forgiven, however, you may have suspended rental losses that could offset some of that income).

Can you lower the house down to the point of breaking even, or even bringing a few K to closing, in order to sell?

Also see if your lender will do a short sale.