Homeowners facing a financial hardship, even before they begin missing their mortgage payment, seriously worry about the consequences of foreclosure. Their most common concerns are being unexpectedly kicked out of their home by the county sheriff and having nowhere to go, how bad their credit will look with a foreclosure on their record, and the possibility of the bank suing them for a deficiency judgment after the sheriff sale. While all of these can be legitimate concerns for homeowners, they are all ones that the foreclosure victims can exercise a degree of control over. Although a foreclosure situation will have unique effects on the homeowners' lives, both personally and financially, their individual decisions regarding whether and how to stop foreclosure, and their financial habits before and after the foreclosure situation will largely determine the consequences after the process has been ended.

The first aspect of the foreclosure process that homeowners can influence is the bank's initial decision to foreclose on the property at all. While many homeowners will avoid the lender's collection calls and ignore mail sent by the bank, keeping in contact with them is often the best method for obtaining more time to save a home from foreclosure. The homeowners can often persuade the mortgage company to give them more time to recover from their hardship and find a solution and not begin the foreclosure process right away. The bank may decide to wait up to six months or longer after the first missed payment to put the house into foreclosure, as long as the homeowners are working on a seemingly viable solution to save the home. Thus, the more contact the family has with the bank, the more likely they will be given the extra time they need to avoid foreclosure entirely.

The same is true for the sheriff sale: the bank can and often will postpone the auction date if the homeowners are working towards a solution to their problem. If the homeowners are in the process of refinancing or selling the home, for example, the bank may allow them an extra few weeks or months to finalize the process. Especially if the bank knows they will lose a large sum of money on the foreclosure auction, they will be more willing to give the homeowners the benefit of the doubt and allow them extra time to work on a plan to stop foreclosure. All they want is the money that is owed on the loan, and if there is a strong possibility of gaining that, there is no reason for them rigidly to pursue the foreclosure and take the property straight to a sheriff sale that will result in a net loss to the lender.

The homeowners also have a degree of control over the credit consequences of missing numerous mortgage payments and having a foreclosure reflected on their credit report. Obviously, their score will start dropping as soon as they have missed a payment, and it will be at its lowest if the home is sold at the county sheriff sale. This is just one more reason for them to exercise their options in obtaining more time and postponing the foreclosure auction. But the effects of the missed payments on their credit will also depend on their other spending habits and payment history. If they are able to remain on top of credit cards, car loans, and student loans, their credit score will not drop as much as if they are behind on all of their debt payments. Credit scores in the high 400's are not uncommon for homeowners behind on everything, while homeowners who are just behind on the mortgage may be able to stay above 600.

This makes it important for homeowners to carefully consider how to spend their income during a foreclosure situation. It may be better to keep their credit score higher by paying all of their other bills and try refinancing with a new lender. However, this means their income can not be saved up to qualify for a repayment plan with the mortgage company. But if they save as much money as they can and fall behind on their other bills, they may be able to qualify for a workout solution with the lender but their credit will be severely damaged for years after the foreclosure. Doing neither and just saving the money to move on with their lives, putting all of their mortgages and debt behind them is another option, although rarely recommended for homeowners who have any intention on applying for new credit after losing their homes.

For homeowners who do end up losing their homes to the foreclosure process, they can take control of the process of financial recovery. The negative payment history and foreclosure status of the loan will appear as a negative mark on their credit for 7-10 years, but it is mainly the first two years after they lose the home that are most difficult. During this time, they will only receive new credit with high interest rates, low balances, and high fees, and may be turned down for larger amounts necessary to purchase a new car, for example. However, homeowners can use this time to begin aggressively working on their credit record, by paying off older debts, going through a credit repair program, and establishing a new on-time payment history. The further in time they get from the foreclosure, the less it will affect their scores and, combined with paid off loans and current accounts, they may be able to qualify for a mortgage within a couple years after facing foreclosure.

Also, the possibility of the homeowners being sued after foreclosure is frequently so remote as to be not worth worrying about. Lenders understand that homeowners face foreclosure due to a lack of funds, so it is not in the bank's interest to sue these foreclosure victims after they have just lost their homes. This does not mean the mortgage company is compassionate, but that it does not see the profit in spending time and money to pursue another lawsuit after the foreclosure and obtaining a deficiency judgment that it will be nearly impossible to collect on. It is also not good business practice for the lender, who does not want to be known as the only bank that aggressively sues its former clients and paying customers due to a financial hardship, just because they can. So homeowners who have lost their homes have little to worry about from the lender in terms of being sued a second time.

There are many concerns that homeowners should have when facing the possible loss of their homes due to foreclosure. Considerations need to made, such as how best to stop the process, who to trust for foreclosure help, and how much time they have to work out a solution. Homeowners, though, also worry to a large extent about aspects of the foreclosure process that they have some control over, such as how long it will take the bank to foreclose on them after missing the first payment, what effect missing mortgage payments will have on their credit, and the possibility of being sued for a deficiency judgment after foreclosure. However, these concerns can be turned into advantages and opportunities by foreclosure victims, who understand how the process works and what the real dangers are to being in foreclosure, instead of worrying about consequences they believe are out of their control but that they influence greatly. This is why homeowners need to seek out foreclosure advice on their own and understand as much as possible, so they do not feel as if the situation is beyond their power to control and they feel left in the dark to lose their homes.

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