The mortgage industry now says that almost half of all homeowners who have lost their homes to foreclosure had never contacted their lenders for help. That is an alarming statistic in light of the unprecedented amount of resources directed to slow the tide of foreclosures in the United States. Never before in history has so much money been made available for mortgage relief. Additionally, the publicity surrounding the associated array of assistance programs has been immense. Yet, sadly, many homeowners fail to take advantage of these resources, eventually succumbing to the loss of their homes. It is critical to know that there are a multitude of programs available to help distressed homeowners, but it is also imperative that homeowners take the initiative and contact their mortgage servicer and/or lender. One of the most effective resolution methods for people struggling with their mortgage is a loan modification – but this is a time-intensive process that requires a high degree of personal attention from the servicer. Unfortunately for homeowners who have lost their job, and have no firm prospects on the horizon, the options are few. But for thousands of other homeowners facing foreclosure it pays to take charge and start the process right away. Before we proceed, a word to explain what a servicer is. A mortgage servicer is a company that plays the middlemen role between a borrower and the lender that holds the mortgage. The servicer collects homeowners’ monthly payments, handles property tax and insurance transactions, and forwards the monthly payment to the lender. Servicers also conduct collection, loss mitigation, and home retention activities. Hence, they are a necessary contact resource for any home assistance program.

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If you have experienced a foreclosure, you know what it’s like to leave your home, pick up the pieces, and make a fresh start. After losing your home, you have probably resolved to work hard and earn enough income to get another mortgage after foreclosure. Good! You deserve another shot at the American Dream. But you may wonder about your credit score. You know that potential lenders will consider your credit rating and you are concerned that by going through foreclosure you have permanently damaged your chances. You wonder how long after foreclosure you can purchase a home. If you are thinking about buying a home after foreclosure, you first need to understand what your credit score is and how it may factor into a lender’s decision. Your credit history includes all of your credit activities including credit cards, store charge cards, your auto and home loan, and student loans. In order to assess your creditworthiness, most lenders use the credit score system designed by the Fair Isaac Corporation (FICO). It is a sophisticated credit-scoring formula that compiles your credit history and evaluates the risk that you may default on a loan. FICO scores range between 300 and 850. The better your credit history, the higher your score. A score below 620 is typically considered “sub-prime.” “Good” is 620 to 650, and above 720 is seen as “excellent.” According to FICO the median score is 723. A home loan default and foreclosure is a major credit event. Some experts believe that a foreclosure will result in an immediate 250-point drop in your FICO score, and that it will take at least 24 months of perfect credit before a lender will consider you for a reasonable loan rate. A short sale (where your lender agrees to a sale of your house at a loss) may be less damaging. One factor impacting your credit score after foreclosure is how high your credit score was before the foreclosure. Unfortunately, your credit score probably wasn’t that terrific because you were probably late with other payments as well.

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