The True Impact of Foreclosure on Your Credit

Buchalter Law Group banner

When you’re facing foreclosure, it may feel like there are no other options available to you, and you may be incredibly worried about the future of your home and your family. As Brevard County foreclosure defense attorneys, we understand exactly what you’re going through, and we want to help you overcome the serious and lasting impact a foreclosure can leave on your life.

In order to assist you with avoiding foreclosure, you’ll first need to understand the true impact it can have on your credit ratings – and how you can defend against foreclosure actions.

What Is the Impact of a Foreclosure on My FICO Score?

One of the most important – and devastating – impacts that a foreclosure can have on your life is by dropping your FICO and other credit scores for years to come. You can expect it to fall anywhere between 200 to 300 points, which can bump you far below the national averages, especially if you were already struggling with your credit score.

The impact of a lowered credit score can’t be understated: It can affect your ability to purchase a new home, get car loans, or even purchase car insurance. A foreclosure mark will also remain on your credit reports for up to 7 years, although in some cases you may be able to diminish the effect within two years with on-time payments. While short sales and deeds in lieu may also drop your credit score, a foreclosure is often considered much worse to prospective lenders.

In addition to damaging your FICO and other credit bureau scores, a foreclosure can have the following negative impacts:

  • Psychological trauma from losing your house
  • Homelessness
  • Inability to purchase another home for many years
  • Prejudice from future lenders, employers, and landlords
  • Depression and anxiety

Defending Against Foreclosure Actions

The mortgage servicing industry has been under increased scrutiny ever since foreclosures prompted the Great Recession in 2008. While courts previously used to “rubber stamp” most foreclosures, they now tend to take a more sympathetic ear when homeowners do have legitimate complaints about the mortgage servicer.

While a mortgage modification plan is often the best way to both prevent foreclosure and keep your house, here are some other common defenses to challenge foreclosure:

  • The mortgage servicer made a mistake, such as crediting payments incorrectly or overstating your reinstatement amount.
  • Your loan was granted through the federal government, and loss mitigation laws were not followed correctly.
  • You never received a breach letter on the default violation for your mortgage.
  • You’re on active military duty and must therefore have your foreclosure in court.

If you’re facing foreclosure, we have more than 40 years of combined experience to utilize in your foreclosure defense. Contact our skilled legal team at The Buchalter Law Group at (321) 320-6088 for a free consultation.