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Many Bradenton, Florida homeowners are struggling with mortgage payments.  Some are faced with the threat of foreclosure.

What exactly is a foreclosure?
A Foreclosure occurs when the Borrower falls behind with their payments and the Lender takes legal action against them in order to seize the property.

Here is the wekipedia definition:
Foreclosure is the equitable proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner’s failure to comply with an agreement between the lender and borrower called a “mortgage” or “deed of trust.” Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, it is typically said that “the lender has foreclosed its mortgage or lien.”

The foreclosure process begins when a borrower defaults on their loan payments and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways:

1. The borrower reinstates the loan by paying off the default amount to during a grace period determined by state law. This grace period is also known as pre-foreclosure.
2. The borrower sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history. A short sale may occur.
3. A third party buys the property at a public auction at the end of the pre-foreclosure period.
4. The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned or REO properties (Real Estate Owned by the lender).

What happens to your credit with each of these four possibilities:

1. Outcome number one. Your credit might suffer a little for the late payments you incurred.  But, this is the least damaging option.
2. Outcome number two.  If you can sell the home and pay off the loan in full, this is the absolute best option.  There is no damage to your credit.  If you can’t pay the loan in full and complete a short sale, your credit will suffer a little, but at least you won’t face the devestating impact of foreclosure.
3. Outcome number three. Your credit is ruined and it is years before you can buy another home.
4. Outcome number four.  Your credit is ruined and it is years before you can buy another home.

(Copyright © 2007 By Dan Forbes, All Rights Reserved.)