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Stop Foreclosure and Protect Your Credit Rating

Foreclosure is a difficult process for any homeowner. Proceedings start once a person has not made either payments or acceptable arrangements for payments for over 90 days. In California, it is estimated that nearly 12 out of every 100 properties is in some stage of foreclosure. There is, however, a way to stop the process.

When a bank begins foreclosing on a property, they are looking to re-coup their original loan by assuming the value of the property and then selling it again. This is a lengthy process a bank would much rather avoid. It would much rather agree to a sale, even at a loss of the original loan amount. A cash home buyer can likely complete a transaction with the homeowner that will stop the bank from moving ahead.

The ideal scenario for selling a house takes place when a homeowner decides he or she will make a tidy profit and it is time to move on. The vast majority of sales work this way. A small percentage, however, are caught in foreclosure, where payments are unable to be met and the bank seizes the property.

The fastest way for a property to avoid foreclosure is through a sale to a cash buyer. The amount of the sale can then be used to pay off the loan and penalties. Even if you owe more than the house is worth, a bank will be much more willing to negotiate in good faith at this point and accept far less to avoid getting the house back; this is known as a short sale and is very effective in a depreciating market.

The State of California uses a system of nonjudicial foreclosures, meaning that no court order is required to begin proceedings. The Notice of Default is filed with the county courthouse and delivered to the homeowner at the same time. This invariably speeds the process along, giving a distressed property owner less time to either raise money or work out an agreeable arrangement with the bank. When homeowners manage to stop a foreclosure proceeding in the state of California, they are also protecting their credit rating. Should they wish to return to the housing market, other lending agencies will not see the black mark of foreclosure on their credit reports? Otherwise, it can take seven years for a foreclosure to disappear from a person's credit history.

There are companies that are able to complete quick transactions for sellers that are either simply tired of their property being listed with no sale or facing foreclosure. The offer price will be lower than a seller would like, but if they are facing a foreclosure process, the long term savings to credit and reputation can be incalculable.

Copyright Property Partners, LLC 2007

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