4 Biggest Foreclosure Myths

Myth #1:  You should move as soon as possible once foreclosure proceedings start otherwise you will be forcibly thrown out on the street.

Truth: Foreclosure proceedings can take several months from the time that the first notice of default is sent and the time your home is put up for sale at the public auction.  The new owner then must follow the state legal procedures to evict you, which will require at least some notice (from 3 to 30 days) and a court order.

Myth #2: When facing a foreclosure, the best option is to do a short sale.

Truth: A short sale occurs if you can convince the lender to sell the property for less than what is owed.  A short sale will only be granted is the case of hardship has been made.  Part of the problem with short sales, is upon the close of escrow, you will give up the opportunity to live in the house for many months, payment free.

Myth #3: If your home is being foreclosed upon, there is no reason to file for bankruptcy.

Truth: If you plan on staying in your home payment-free as long as possible, then a bankruptcy could delay the foreclosure auction.  Talk with an attorney.

Myth #4: Your home won’t be sold in foreclosure while you are negotiating with the bank.

Truth: Once the foreclosure proceedings begin, negotiations with your lender must be successful prior to the date set for the foreclosure sale.  Lenders often state right up until the date of a scheduled foreclosure sale that the negotiations are on track and then pull out at the last moment.  It may be a result of disorganization.