How long after a homeowner stops paying the mortgage before the bank forecloses? What happens during and after foreclosure? What are the consequences, other than losing the home,(legal,tax) of a foreclosure?
There is no strict rule but generally mortgage companies do not start foreclosure proceedings until you are ovedue by 90 days. Once the process starts it takes 120 days to conclude. The time period starts when the first notice is sent to you by certified mail. If you wish to keep the house you must file a chapter 13 before the house is sold or it is too late to act.
Depending on whether the debt on the house was debt incurred to purchase it v. an equity loan, the tax consequence is different.
Hope this helps
In Washington, it takes at least 120 days to go through all the steps required to hold a foreclosure sale. There are several steps, beginning with a default letter and an opportunity to cure. The legal and tax consequences of a foreclosure depend on a wide variety of circumstances, and so it would be irresponsible to give a general answer to this kind of question. Certainly, a foreclosure will have significant adverse effects on your credit rating and your ability to borrow in the future.
In the current environment, many loan companies will work with a borrower to try to avoid foreclosure. In addition, there are ways to contest foreclosure, and in some circumstances, a Chapter 13 bankruptcy can be an effective tool for saving one's home. For most people, their house is the biggest investment they will ever make. Before losing it to foreclosure, I would urge you to seek advice from a lawyer.
