More than half of all bank-owned properties are still occupied, and it takes an average of 572 days nationwide to complete a foreclosure, according to a new report by RealtyTrac. That’s a lot of time for a homeowner to mull their fate while waiting for a foreclosure eviction.
That approximately year and a half of waiting for the foreclosure eviction date to arrive in the first quarter of 2014 is up 1% from from 564 days in the previous quarter and up 20% from 477 days in the first quarter of 2013.
Here’s a chart from RealtyTrac on total foreclosures, showing that overall they’re dropping:
During the time that they’re in their home awaiting eviction, if they’re not negotiating a short sale, homeowners can start preparing for the inevitable drop in their credit score that will come from a foreclosure and can work to limit its impact on their credit report, experts say.
A foreclosure will likely stay on a credit report for seven years, so preparing before a foreclosure eviction can help improve a credit score for years to come.
Foreclosed homeowners have plenty of company. There are 483,224 real estate owned, or REOs, nationwide, meaning they’re bank-owned properties still occupied after the completed foreclosure. Fifty-one percent of those — 259,783 homes across the country — are still occupied by the former homeowner or tenant, according to RealtyTrac.
Metro areas with the highest percentage of occupied REOs include Nashville, Tenn (80%), Richmond, VA (80%), New York (73%), Houston (73%) and San Jose, Calif., (73%).
“There are always going to be homeowners who aren’t able to make their house payments, but we are definitely back to a normal foreclosure rate,” says Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty, covering the Oklahoma City and Tulsa, Okla., in a press release.
What to do before foreclosure eviction
Working on your credit after a foreclosure eviction is important, but it’s even more important to go into it knowing how a foreclosure will appear on your credit report, says Carla Blair-Gamblian, a credit consultant for the Lighthouse program, a program dedicated to helping veterans and active-duty service members with credit problems.
[pull_quote align=”left”]”The longer it takes for the foreclosure to finalize, the more likely your credit report is to see monthly negative marks. The more months, the more negative marks, the lower your score will go,” says Carla Blair-Gamblian, a credit consultant.[/pull_quote]Long before a foreclosure eviction, stay current on how quickly your lender is selling the home, Blair-Gamblian advises. Not all foreclosures take as long as the national average of 572 days. Some can take three to four months, and others can take two to three years.
“The longer it takes for the foreclosure to finalize, the more likely your credit report is to see monthly negative marks,” she says. “The more months, the more negative marks, the lower your score will go.”
Homeowners preparing for foreclosure eviction can make sure the foreclosure happens quickly by staying in contact with their lender, and then checking their credit report in 30 to 60 days following the final sale to ensure it’s marked appropriately, she says.
Some of this is contingent on how long you stay in the home and fight foreclosure eviction notices to vacate the property. A sale is more likely to be pushed by a lender if you get out of the home and find alternative housing, Blair-Gamblian says.
Pay bills on time before foreclosure eviction
Homeowners should also do their best to maintain all other lines of credit, she says, such as focusing on paying all of their other bills on time. The fewer accounts that default, the better chance your credit will rebound, she says.
There are plenty of things to do after a foreclosure to start improving your credit, but one of the first things to do is make sure the credit report has the date of final sale as the close date, and that the balance owed or past due is listed as zero, Blair-Gamblian says.
Another thing to do, which can be done before or after a foreclosure eviction, is have an attorney write a letter to your creditors that explains how your home came to be foreclosed. Some life-changing events may have led to it, such as a job loss, that you may now be over that a creditor could take into account.
Letter helped get credit
Chris Moyer did this when she lost a condo to foreclosure in the 1990s for a number of reasons. Some of the issues her lawyer cited in a letter included a drug infested neighborhood, bankrupt builder, the condo association putting liens on the building, and abandoned buildings that didn’t bring in fees for the association to cover costs.
The information allowed her to move into an apartment without paying additional fees, and a car dealer approved her for an interest rate about 2 percentage points over the norm.
“I kept my eye on my credit report and knew when to ask to remove certain postings,” Moyer says. “I still belong to a credit reporting company and watch my credit score vigilantly.”
Things gradually returned to normal. Last year she bought a new car with her 800 credit score at 0% interest, and has bought a mobile home with cash in great neighborhood.
Click on your state in the RealtyTrac graphic below to find the foreclosure rate:
