As common as foreclosure news is these days, both buyers and sellers tend to have major misconceptions regarding their rights, responsibilities and the overall process. No matter which side you're on, here are a dozen myths demystified.
- The bank really wants your home back. It's not your home but the money lent for its purchase that the bank wants to recover. Foreclosure is a time-consuming, last-resort process for banks, and most will do everything possible to work things out with a homeowner in order to avoid it.
- Filing for bankruptcy stops a foreclosure. Bankruptcy creates only a temporary delay in the foreclosure process, so it's not a strategy for stopping it altogether.
- You're not responsible for paying the bank's legal fees. Actually, you are, and you'll do so if you want to hold on to your home. All of the details are in your mortgage agreement, so take a close look at the fine print.
- Even if I pull together the money I owe after the foreclosure process has begun, it's too late to stop it. Not so. Most states have laws requiring that foreclosure proceedings be stopped if the homeowner has the money to cover all back payments, late fees and legal fees owed. A mortgage negotiation professional can assist you with this process if needed.
- The bank will take all my stuff along with the house. All personal property is yours to take; however, fixtures, floor coverings, appliances and anything else permanently attached to the house must stay.
- My involvement with the property is over once the bank takes it back. After foreclosure, if the bank sells the home for less than you owed on the mortgage, you'll still be responsible for the difference or "deficiency." What's more, they can collect interest on that amount. A deed in lieu of foreclosure or chapter 7 bankruptcy may clear you of owing a deficiency, so consult a bankruptcy attorney if you have questions about your status and options.