Denver Foreclosure Information

Working with homeowners in distress often brings many questions.  Some questions I can answer with ease, others I have to look to others to find.

When it comes to your FICO score there are certain factors that effect it.  FICO Scores use mathematical models taking into account various factors in each of these five areas to determine credit risk:

  1. payment history
  2. current level of indebtedness
  3. types of credit used
  4. length of credit history

Lenders use your FICO score to assess your credit risk on whether to extend a loan.

A FICO score range is between 300 and 850.  Typically a FICO score above 650 indicates a person who has a very good credit history.  When a score falls below 620 a person will find it increasingly difficult to obtain financing at a favorable rate.

Protecting your FICO score is important

When considering a Short Sale or outright default on a loan, one needs to know the ramifications.  Many persons who have absolutely no choice but to default will have to deal with the consequences regardless, but those planning a "strategic default" might decide otherwise when they know the difficulty in store for them!

A recent post on the FICO Banking Analytics Blog illustrates how Delinquencies affect scores

The FICO study simulated various types of mortgage delinquencies on three representative credit bureau profiles of consumers scoring 680, 720 and 780, respectively. I say “representative profiles” because we focused on consumers whose credit characteristics (e.g., utilization, delinquency history, age of file) were typical of the three score points considered. All consumers had an active currently-paid-as-agreed mortgage on file.

Results are shown below. The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact.

Chart of Delinquency Effect on FICO ScoreResults of the this study:

  • Higher FICO scores fall the lowest
  • There isn't much of a difference in the type of default.  Short sales, foreclosures all suffer about the same amount of fall
  • It takes about 7-10 years to recover
  • The higher the beginning score was the longer it will take to recover

The author also noted in this particular study they only used select consumer credit profiles.  There are many credit profiles so in the end your results may vary.

It is interesting to note lenders are on the watch for homeowners who are planning their strategic defaults.  It only makes sense as defaults cost the banks money. Not only that, home values in the neighborhood decline causing the economic mess we are in to linger longer.

Speaking of one who has seen more than one real estate decline, this to will pass.

If you are having a hard time making the payments on your home due to job loss, health issues, death in the family or any of the reasonable excuses, doing a short sale or foreclosure might be your only choice.

If you are not suffering from any of these issues but are just spooked by the constant negativity in the media, remember to look at the positive side.  95% of Americans ARE making their house payments!

Yes, neighborhood values might be down, but that is now. Values will eventually start rising again.  The real estate market is a market that fluctuates.  Builders have reduced their building but we haven't stopped having babies.  Nor are people stopping their American dream of immigrating to the U.S.

This real estate market shall turn a corner and we will see values rise, just be virtue of supply and demand.  We need housing.  People want to OWN a home. We are not a nation of renters, we never have been we never will.

If you are searching for the answer of what to do and need more information, maybe I can help.  Call me, let's talk about your situation.  Perhaps I can bring clarity to what you need to do.

I welcome your call.