Repair foreclosure credit damage in Massachusetts

The Notice of Default: Whether it’s on the way, or you’ve already received one, it’s time to take steps to prevent bad credit from foreclosure. Going into default will affect your credit; however, there are strategies to minimize the severe impact on your credit score. Knowledgeable specialists can assist with finding the best path, letting you maintain credit, and possibly prevent foreclosure. Seeking education is the first step in preventing credit damage from foreclosure.

What is Foreclosure and How Much will Foreclosure Hurt My Credit Score?

Foreclosure is the legal process that begins when you stop making your loan payments. If you don’t settle within a specific time frame, your mortgage lender is legally entitled to recover your property through trustee sale and collect as much of the loan amount as possible to correct the deficiency.

However, there is good news: foreclosures, short-sales, and deed-in-lieu only drop your credit score by 85 to 160 points depending on the credit you already have. If you have a higher credit score – that you are trying to maintain – expect more points to be deducted from your credit score. That may or may not seem like a lot, but it’s less damaging than bankruptcy: you’ll be looking at a score decrease somewhere between 130 and 240 after discharge of debt.

Keep in mind, you may owe taxes on any amount forgiven by your lender and expect the credit recovery process to last from three to seven years, or possibly less if you take control early. Preventing the foreclosure process before it starts – even before the purchase of the home – is the most effective strategy to keep your good credit.


How Do I Minimize the Damage To My Credit When Facing Foreclosure Proceedings In Massachusetts?

Preventing foreclosure is the most effective way to minimize the damage to your credit. When you know you’re going to be late, or if you already are, contact your lender and talk to them about your options. Many private and government-sponsored loan programs can help you bring your loan current and make payments more affordable.

Owning a home is a big commitment – and so is keeping it. A plan will help you look at the scope of homeownership objectively. Will this house help you grow your income and keep it stable?

If you’re not a homeowner yet, consider whether buying a house is a good option based on your lifestyle and stability of income. In any case, prepare a budget forecast for the next five years using realistic financial inputs and outputs that balance your needs and wants.

Contact a specialist who is knowledgeable about how to get out of foreclosure quickly with minimal damage to your credit. As part of your due diligence and planning, consult a financial counselor for assistance with developing a plan to help you identify alternative strategies to avoid foreclosure and bad credit.

If you really can’t afford to keep your home, don’t do it. Alternatively, consider renting your property or selling to investors for cash. You may also be able to convert it to an investment property, rent it out, and find more affordable accommodations for yourself – while also generating passive income.

Don’t wait for cash-for-keys. Take proactive steps to control your story.


How Do I Repair My Credit After Foreclosure?

Here’s what you can do to repair your credit after foreclosure:

Either on your own or working with a credit repair professional, you can reach out to creditors and the credit bureaus to request that any incorrect or outdated information be removed from your credit report. In terms of direct action, that’s about the best you can do to make an immediate credit improvement.

Beyond that, financial management is the best strategy. At this point, you’ll have to adjust your spending to fit your income and expenses. In your financial plan, include your car, phone, current bills, food, and entertainment budget – all of which must be accounted for and monitored.

Evaluate your bills and eliminate unnecessary spending. It’s 2020 and now is the time to determine the underlying cause of your foreclosure. Additionally, financial management is good for the mind and body: Cleaning out your budget feels just as good as organizing your home or office.

Furthermore, creating a plan with a financial professional to deal with foreclosure will help you determine what type of approach will fit best with your life and homeownership goals. They can help you bring together all of your finances, whether business or personal, and create a plan that enables you to repair your credit more quickly after foreclosure.

Choosing the Best Route

During the process, you’re likely to feel trapped but keep faith: you do have options. Start by talking to your lender to see if any payment arrangements or loan modifications are possible. Also, contact a foreclosure counselor for guidance and support.

Detailed budgeting helps prevent bad credit from foreclosure. Create a plan with realistic financial spending and expenses. When you’re ready to buy your next home, consider the best size and value of home for your needs and make your mortgage payment a priority. Seek professional advice from someone who can help objectively formulate a plan to prevent foreclosure credit damage in Massachusetts.

Choosing the best route can be tedious and often requires advice from someone who understands real estate and financing. They may provide options such as loan modifications, financial counseling, renting your property, or selling to an investor to prevent foreclosure and the associated credit consequences.

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What to Do When Facing Foreclosure in Massachusetts

Facing foreclosure in Massachusetts can be a nerve-wracking proposition; however, there are some helpful strategies you can use to improve your odds of keeping your home and good credit:

Talk to Your Lender and Attorney

The first thing to do if you know you’re going to be late on a payment, are already past due, or you’ve received a Notice of Default (NOD), is to call your lender and let them know about your situation. Most lenders and loan servicers are very willing to work with you to find the best solution that will help you either keep your home or move on safely.

Additionally, make it a priority to consult your attorney, financial advisor, and CPA to determine the economic and tax consequences of accepting any deals with your mortgage holder.

If you qualify for VA, FHA, or other government-backed home loan programs, your lender may be able to offer you modified terms and late payment forbearance to help lower your monthly housing costs and bring your mortgage current.

My bank closed or changed its name. How do I find out whom to contact?

The best place to start looking is your mortgage statement. In many cases, home loans are sold off by the bank or lender that initially made the loan to wholesale mortgage investors.

Research the Foreclosure Laws in Massachusetts

After you’ve gotten the initial feedback from your lender and legal/financial advisors, know what actions to take immediately, and received information on the process, it’s a prudent idea to do your own research on the foreclosure laws in our State of Massachusetts.

Fortunately, in MA, we have a non-judicial foreclosure process; meaning, you won’t necessarily have to go to court during the process – though it’s a possibility depending on how your legal council advises you to proceed and whether the lender pursues damages.

Here’s a brief rundown of the foreclosure process and timing in Massachusetts:

  • The loan servicer must give you 120 days after non-payment before officially starting the foreclosure process.
  • This period allows you to research your options and consult with your legal and financial team.
  • The lender will then issue the Notice of Default (NOD), which will give you 90 days to cure the debt, followed by the Notice of Intent to Foreclose at least 21 days before the sale date.


There are a great many more details that accompany these basic guidelines. Before you take any action, speak to a legal professional and seek guidance from a foreclosure counselor. You can find no-cost counseling provided by HUD.

Apply for Loan Modification, Forbearance, or Repayment

Fortunately, your lender may offer several options to help to stay in your home and bring the loan current. Depending on your situation, you may qualify for a loan modification, forbearance, or repayment plan.

A loan modification may offer the opportunity to lower your interest rate, extend loan terms, and change from an adjustable to fixed-rate note. Forbearance gives you a brief break from payments to catch up and sort things out. Finally, the repayment plan lets you pay back the past due amount over a fixed period.

For each of these options, you’ll need to submit financial information and a statement demonstrating your financial hardship and how you plan to get back on track and continue making on-time payments.

Taking a Graceful Exit if it Comes to It

If you try every option and face the reality of having to move out of your home, several options can make the transition more pleasant.

Rather than go through the process of foreclosure and eviction, you can ask your lender (if they don’t offer it first) if they will accept a ‘deed-in-lieu of foreclosure.’

This legal strategy involves surrendering the deed and possession of the property to the lender. In exchange, the lender will not pursue formal foreclosure proceedings and may not sue for damages.

After the trustee sale, the bank or new owner will likely offer you ‘cash for keys.’ In other words, they provide you with a fixed sum in exchange for you willingly moving out.

These funds will help you arrange for a moving truck/helpers and find new housing. It’s best to accept a cash-for-keys offer rather than wait for a sheriff to arrive and forcibly remove you and your belongings.

Alternatively, if you have enough equity in your home, you can sell your property before you receive the Notice of Intent. Listing your home on the market through the conventional selling approach can take many months to close and resolve the past due payments.

The ideal option for sellers in this situation is a cash sale. A cash sale involves no conventional debt and lets you close in less than a month with no buyer loan or repair issues – and you may be able to walk with cash and less damage to your credit.

Weigh Your Options and Make the Best Decision

Choosing a strategy to bypass, overcome, or deal with the consequences of foreclosure is an important decision. The first and most crucial step to take is to get advice from legal and financial experts, including your attorney and accountant, or a qualified foreclosure counselor. Educate yourself on all the options available and make a confident decision that will help you make the best of a tough situation.

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