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A foreclosure will effect your life and finances for a long while to come. Specifically, a foreclosure remains as a huge black mark on your credit reports for years. That, among other reasons, is why you should avoid a foreclosure, which is possible by negotiating with your mortgage lender.

You can still possibly prevent foreclosure if you are willing to be up front with your bank and let them know exactly where you stand financially when it looks like you’re going to default, or start missing payments. Loan modification is also a tool to help you recover from a close call, and involves adjusting the terms of your loan, such as interest rates and monthly payments, or could even mean adding missed payments to the tail of the mortgage.

Some banks, in the interest of avoiding foreclosures with their properties, will agree to sell a house quickly for less than its market value. This is called a short sale. It can stop foreclosure, but its probably more beneficial to the bank than it is to you. It acts very similarly to a foreclosure in terms of reducing your credit score, though a short sale will mean that you could be eligible to buy a home again much sooner.

If neither loan modification or short sale works, then there isn’t too many options remaining. Here is what you can expect to experience:

The bank sends out a Notice of Default after the first missed payment.

Shortly after this (at 60 days post missed payment), the lender will contact you to encourage any payment amount to help keep you current on your loan.

After 90 days of missed payments the lawyers typically get involved.

You may then find that, in as little as 180 days from your first missed payment, your property will go to auction. After that you have the option to either leave voluntarily or wait for eviction, which could take several weeks or several months to happen.

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