Foreclosures - What happens to the owner?

Question

Hi, i'm just curious as to what happens to the owner of the foreclosed home. I'm assuming, for one, that his/her credit goes down the tubes. But what else happens? Are they "free and clear" of the property, or does any money they make after the foreclosure still owed to the bank? If their credit does in fact go down the drain when foreclosing, are they likely to lose all of their current credit cards as well?

i'm just trying to better understand the position of people who may at sometime foreclose - and i think this information would help.

Ryan Webber · Answer

Bush made it too easy?

I didn't know he was a mortgage broker.  I didn't know he was the one putting together those creative loan programs.  I didn't know he was the one making all those areas appreciate 50% in a year and have everyone refinance and not be able to afford their payment anymore.  I didn't know either that he was the one who controlled interest rates.  I really didn't even know he was the one who made 95% of Americans want to urinate farther than the next guy.

I think if you are going to blame anyone for the loose money you should blame the people that control it, the Federal Reserve.  You should probably blame Bernanke or rather Greenspan more for it than Bush.  Though, I don't think that just the loose money was the cause.  There were multiple factors that played into it, and I think blaming it on any one person is ignorant at best and idiotic at worst.

Ryan Webber · Answer

Unfortunately, there is a scarcity of good money management skills.  Financial illiteracy has been an ongoing problem for milleniums.  It's sad to see it happen to nice people, but with the knowledge to change their finances at their fingertips these days through books, seminars, and sites like this, its hard for me to feel bad for ignorant choices.

N/A N/A · Answer

C'mon, it's Bush's fault!?  I know I'm a little late to this one, but don't throw people's problems on to Bush or his "puppet" (Greenspan, according to you).  I thought Clinton was a terrible president, but you don't see me blaming my hemmoroids on him...   It's that kind of bs, spineless, lack of accountability that is really weakening this country from within.  It doesn't matter who the President is.  Drop your sack, and take responsibility for your actions.  Like a man.

Chris Da · Answer

I can give you an answer to your question as of today. I purchased a nice townhouse this afternoon. When I spoke to the home owners, they we 80% packed. They are moving into thier parents house. I felt bad because of the 2 small children. The part that really bothered me the most was the high end furniture and the plasma tv on the wall, and all the high end stereo equipment. I don't know about anyone else, but if I was in a jam like that, the plasma and the stereo equipment would have beeen on ebay a long time ago. JMO
In all honesty, they were very nice people, and I even offered to letthem use my truck to help them move. I hope they are able to save up enough and get another place someday.

Chris Da · Answer

You are correct. That is an ignorant staement I made. There was more to it than I explained other than my staement about Bush.. I do feel the Grenspan was and always was a puppet for what ever president that was in office. He was very political, and now still is and makinf millions at it with his speeches that continue to shift the market. The bottom line is that Bush wanted to make it so many Americans could get houses. That is what happend, and they are now losing the houses. I agree that the lending practices were far to creative, but then again the Federal Reserve could have put more strick rules in place....Which they are now attempting to do under Uncle Ben...

Tracy Percival · Answer

I agree with Ryan
 :clap:

Check out the new Blog post Josh wrote regarding the upsurge in forclosures

Chris Da · Answer

In my opinion, BUSH made it TOO easy for alot of people to get houses. They should have never been able to get the house they got to begin with . I have plenty of friends WAY over thier heads in DEBT. MOney is too easy to get these days. I hate to say it, but if people would just NOT worry about the JONES and worry about what is best for them, there would be alot of people NOT in this situation. I sware, people are in a pissing contest as to who can aquire the most debt to look rich. 
I always suggest to my "WEALTHY" friend to invest, say in a mutual fund or a REIT, but the problem is simple.....You can't drive around a show off a mutual fund, or a REIT..But you can sure as hell purchase a 50k BMW and look good...That is the problem in the USA....

John Cashin · Answer

interesting... thanks for that info.

N/A N/A · Answer

Sometimes, a homeowner is able to stop the foreclosure and preserve continued homeownership.  They can do this by requesting, and qualifying for a mortgagee approved forbearance plan, or a court ordered repayment plan in bankruptcy.

For the sake of argument, let's agree the home is lost to foreclosure. If the foreclosure auction raises enough to cover the liens, terrific.  If not,  in some states, the former lender can pursue the former homeowner and seek payment.

A foreclosure, and subsequent foreclosure sale will remain on one's credit report for many years.