Wednesday, November 26, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

How long will foreclosure stay on our credit record?

jones column sig

By
From page C3 | February 23, 2012 |

Q:  My family and I have found ourselves in a situation we never thought we’d be in. 

We are heading for a foreclosure on our home. We bought our house in 2005, at what turned out to be the top of the market, and now we’re so upside-down it just seems like we will never get ahead. 

Still, we tried to hang on, until my wife lost her job just before Christmas.  We couldn’t make the January payment and we just got a letter saying that the bank intends to foreclose. 

I know you’ve written extensively about foreclosures and such, but my question is pretty simple.

Can you tell me how long the foreclosure will stay on our record? We would like to have an idea so we can make plans for buying another home in the future. Thank you in advance.

A:  Your question is extremely relevant today. But not as simple as you may think.

That’s primarily because lending guidelines are in a constant state of flux. How long a foreclosure stays on your credit report isn’t really relevant to your ability to buy another home. However, the fact that you had a foreclosure at all, combined with your credit score, is.

In a nutshell, here’s how it works.

When you lose a home, regardless of whether it’s through a short sale or a foreclosure, you take the same hit on your credit. FICA, the gods of your credit score, don’t really care. They are looking at your loans.

What they see are loans that were secured by real estate that were never paid off.

The “hit” can be less than 100 points on your credit score, depending upon what your score looked like at the moment you lost the house.

However, a much bigger impact comes from the number of payments you missed along the way.

Regular readers will recall that a bank can foreclose in as little as six months and 20 days after a homeowner misses their first payment. Of course, few banks are moving that fast nowadays, although the rise in short sales, and the resulting decrease in foreclosures, means they are moving faster.

So let’s assume it will take your bank 10 months to get around to foreclosing. That means 10 months of missed payments.

And every month you miss a payment, your credit score is taking a hit.

In my example, that’s 10 or 11 missed payments. At that point your score is already down in the 500s by the time you no longer own your home.

It’s likely that, if you do everything right, it will take four years or more to rebuild your credit to a useable number. It’s strictly a function of your credit score.

A relatively new wrinkle in the process comes from the banks placing new restrictions in their loan qualification requirements.

The federal government came out with standards a year ago that sought to punish homeowners who lost a home through foreclosure, but reward them for doing a short sale.

Recently, more and more banks are picking up similar versions of these requirements.

It goes something like this.

If you went through a foreclosure, you may be disqualified from getting a new mortgage for five years.

However, if you sold through a short sale but missed some payments along the way, there would be a two-year disqualification period.

But if you can short sell and not miss any payments, something some lenders will let their customers do, there might only be a one-year disqualification.

Of course, your credit, income, expenses and cash on hand still have to meet the normal requirements.

So if you want a rule of thumb for planning purposes, I suggest you give yourself five years.

But I have to add that it’s certainly not too late for you to list your property for a short sale. Doing so could knock years off of that five-year projection.

Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like answered in this column you can contact him at SolanoScene@TJones-Law.com.

LEAVE A COMMENT

Discussion | 1 comment

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • Real Estate Bargains and DealsFebruary 26, 2012 - 7:45 am

    So a foreclosure is about half as bad as a bankruptcy. I think a bankruptcy stays on one's record for 10 years. I'd think, too, that seeing a foreclosure on someone's credit record is becoming fairly common. Shouldn't the stigma with foreclosure be disappearing?

    Reply | Report abusive comment
  • Recent Articles

  • Enter your email address to subscribe and receive notifications of new posts by email.

  • .

    Solano News

     
    Groups distribute Thanksgiving food

    By Ryan McCarthy | From Page: A1, 3 Comments | Gallery

     
    County fair proposal, budget topics of scrutiny

    By Amy Maginnis-Honey | From Page: A3, 2 Comments | Gallery

    Police: Vehicle burglaries not new for Fairfield

    By Susan Hiland | From Page: A3

     
     
    Fairfield police offer free gun locks

    By Ian Thompson | From Page: A4, 2 Comments

     
    Fairfield police investigate shooting

    By Susan Hiland | From Page: A4

     
    Library schedules soap-making program

    By Glen Faison | From Page: A4

     
    Vacaville PD seeks VIPS program volunteers

    By Glen Faison | From Page: A4

     
    Science comes to libraries – for all to see

    By Glen Faison | From Page: A5

     
    Soroptimists seek award applicants

    By Glen Faison | From Page: A5

     
    Church’s holiday soiree on Vacaville calendar

    By Glen Faison | From Page: A7

     
    Nichols plans free family concert in Napa

    By Glen Faison | From Page: A7

    Suisun City police log: Nov. 22, 2014

    By Glen Faison | From Page: A9

     
    Suisun City police log: Nov. 24, 2014

    By Susan Hiland | From Page: A9

    Fairfield police log: Nov. 23, 2014

    By Glen Faison | From Page: A9

     
    Fairfield police log: Nov. 22, 2014

    By Glen Faison | From Page: A9

    Suisun City police log: Nov. 23, 2014

    By Glen Faison | From Page: A9, 2 Comments

     
    Weather for Nov. 26, 2014

    By Daily Republic | From Page: B12

    .

    US / World

     
    Anger at Ferguson case based on emotion, evidence

    By The Associated Press | From Page: A1, 11 Comments

    Tough to make a case against police in shootings

    By The Associated Press | From Page: A1, 9 Comments

     
    Protesters return to riot-scarred Ferguson streets

    By The Associated Press | From Page: A1, 8 Comments

    Heirloom ring flushed; sewer workers retrieve it

    By The Associated Press | From Page: A2

     
    Ohio family recovers missing Sasquatch statue

    By The Associated Press | From Page: A2

    Auction fetches $28K for 1st batch of new bourbon

    By The Associated Press | From Page: A2

     
    In Seattle, tofu turkeys get Thanksgiving pardons

    By The Associated Press | From Page: A2, 1 Comment

    Los Angeles freeway sign unveiled with typo

    By The Associated Press | From Page: A2

     
    Agreement: LA jails to improve wheelchair access

    By The Associated Press | From Page: A5

    Window washer fights for life after 11-story fall

    By The Associated Press | From Page: A5

     
    Cosby philanthropy shadowed by sexual allegations

    By The Associated Press | From Page: A6

    Oakland police arrest more than 40 protesters

    By The Associated Press | From Page: A6, 2 Comments

     
    Lawmakers target Golden Gate Bridge sidewalk fee

    By The Associated Press | From Page: A6, 2 Comments

    Arkansas, Mississippi gay marriage bans overturned

    By The Associated Press | From Page: A10, 1 Comment

     
    Calorie count to appear with many prepared foods

    By The Associated Press | From Page: A10

    WWII Museum opening new pavilion in New Orleans

    By The Associated Press | From Page: A11

     
    Police: Students ran high school prostitution ring

    By The Associated Press | From Page: A11, 1 Comment

    Wet basements in Buffalo as flooding fears ease

    By The Associated Press | From Page: A11

     
    Soldiers to spend Thanksgiving in Ebola isolation

    By The Associated Press | From Page: A11

    2 teen female bombers kill more than 40 in Nigeria

    By The Associated Press | From Page: A11

     
    8 shoes of Holocaust victims stolen in Poland

    By The Associated Press | From Page: A11

    Activists: Syrian strikes kill 60 in IS-held city

    By The Associated Press | From Page: A11

     
    AP sources: Top candidate for defense job bows out

    By The Associated Press | From Page: A11, 2 Comments

    Official: Afghan president orders military review

    By The Associated Press | From Page: A12

     
    .

    Living

    Community Calendar: Nov. 26, 2014

    By Susan Hiland | From Page: A2

     
    Today in History: Nov. 26, 2014

    By The Associated Press | From Page: A2

    Community Calendar: Nov. 25, 2014

    By Susan Hiland | From Page: A2

     
    Horoscope for Nov. 26, 2014

    By Holiday Mathis | From Page: B5

    The man I’m seeing makes no effort to get to know my kids

    By Kathy Mitchell and Marcy Sugar | From Page: B5

     
    A do-ahead cornmeal biscuit to sop up your gravy

    By The Associated Press | From Page: B6

     
    Fresh take on an herb-roasted Thanksgiving turkey

    By The Associated Press | From Page: B6

    Turn turkey leftovers into a healthy dinner salad

    By The Associated Press | From Page: B6

     
    .

    Entertainment

    TVGrid

    By Daily Republic Syndicated Content | From Page: A7

     
    ‘Birdman’ leads Spirit Awards nominations

    By The Associated Press | From Page: A7

    .

    Sports

    Vacaville Christian wins 3-0, advances to state quarterfinals

    By Marcus Lomtong | From Page: B1 | Gallery

     
    Curry powers Warriors past Heat 114-97

    By The Associated Press | From Page: B1

    49ers rookies shine in big roles, out of necessity

    By The Associated Press | From Page: B1

     
    Cousins, Kings beat Pelicans 99-89

    By The Associated Press | From Page: B1 | Gallery

    Red Sox bring in Sandoval, Hanley Ramirez

    By The Associated Press | From Page: B1 | Gallery

     
    Messi sets European record with 74 goals

    By The Associated Press | From Page: B2

    Judge OKs Hernandez trial delay in 2012 killings

    By The Associated Press | From Page: B2

     
    Kurt Busch wins delay of Delaware court hearing

    By The Associated Press | From Page: B2

    Giants third base coach Tim Flannery retires

    By The Associated Press | From Page: B2

     
    AP source: Left-hander Jon Lester, Giants to meet

    By The Associated Press | From Page: B2

    Pats are unanimous No. 1 in AP Pro32 rankings

    By The Associated Press | From Page: B2

     
    NFL, union discuss personal conduct policy

    By The Associated Press | From Page: B2

    Bama, FSU, Oregon, Miss St keep playoff rankings

    By The Associated Press | From Page: B2

     
    .

    Business

    New iPhones push Apple’s market cap past $700B

    By The Associated Press | From Page: B7

     
    Twitter lets merchants offer deals to its users

    By The Associated Press | From Page: B7

    US economy posts even stronger growth in Q3

    By The Associated Press | From Page: B7

     
    Thanksgiving travel woes? There’s an app for that

    By The Associated Press | From Page: B7

    US home price gains slow for 10th straight month

    By The Associated Press | From Page: B7

     
    Barbie dethroned by Team Elsa

    By The Associated Press | From Page: B7

    Rain, snow could mess up Thanksgiving travel

    By The Associated Press | From Page: B7

     
    .

    Obituaries

    Leslie “Esi” Gros

    By Nancy Green | From Page: A4

     
    Glenita Reyes McLaughliin

    By Daily Republic | From Page: A4

    .

    Comics

    Peanuts

    By Daily Republic Syndicated Content | From Page: B4

     
    Baby Blues

    By Daily Republic Syndicated Content | From Page: B4

    Pickles

    By Daily Republic Syndicated Content | From Page: B4

     
    Zits

    By Daily Republic Syndicated Content | From Page: B4

    Sally Forth

    By Daily Republic Syndicated Content | From Page: B4

     
    Rose is Rose

    By Daily Republic Syndicated Content | From Page: B4

    Get Fuzzy

    By Daily Republic Syndicated Content | From Page: B4

     
    Frank and Ernest

    By Daily Republic Syndicated Content | From Page: B4

    B.C.

    By Daily Republic Syndicated Content | From Page: B4

     
    Blondie

    By Daily Republic Syndicated Content | From Page: B4

    Garfield

    By Daily Republic Syndicated Content | From Page: B4

     
    Wizard of Id

    By Daily Republic Syndicated Content | From Page: B4

    For Better or Worse

    By Daily Republic Syndicated Content | From Page: B4

     
    Beetle Bailey

    By Daily Republic Syndicated Content | From Page: B4

    Baldo

    By Daily Republic Syndicated Content | From Page: B4

     
    Dilbert

    By Daily Republic Syndicated Content | From Page: B4

    Cryptoquote

    By Daily Republic Syndicated Content | From Page: B5

     
    Sudoku

    By Daily Republic Syndicated Content | From Page: B5

    Bridge

    By Daily Republic Syndicated Content | From Page: B5

     
    Word Sleuth

    By Daily Republic Syndicated Content | From Page: B5