Bad Marriage and Foreclosure?

Dave addresses the issues of foreclosure and marriage with a caller.

QUESTION: Darren is facing foreclosure.  He and his wife were going through a divorce, and they let the house payment go, but now they’re getting back together and want to get the house back.  It is a conventional loan and they are seven months behind.  Do they have a chance of getting their house back?

ANSWER: The seventh month is usually when the actual foreclosure occurs, so you may have 30 more days to clean this up.  With a standard conventional loan, they allow you to catch up your payments until the minute the lawyer starts the foreclosure hearing at the courthouse. 

Don’t forget you’re going to have late fees and legal fees on top of making up the total seven months of payments.  Ask for the exact amount you need to bring your payments current.  Then determine if you can come up with that amount in the period of time they give you. 

If your house is foreclosed on, the bank may come after you for the deficit on the house – the difference between the loan amount and what the house sells for.  They will usually let you make payments on the deficit balance or settle for pennies on the dollar and take a lump sum.  That’s the worst case scenario. 

The most important thing for you to do in this situation is save your marriage.  The house is way down the priority list.  Stuff does not equal relationship.  You need to focus on reconciling your marriage.  Spend the majority of your time and energy focused on getting this marriage back together.  If the foreclosure goes through, it will take 3-4 years before you can get a mortgage again.  In that time, you two should get an apartment and focus on rebuilding your relationship, getting out of debt, and saving up lots of money.

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