Myths are a bit like gossip, the more they are repeated the worse they become. And in most cases they are not true to start with. All bad things bring their own spate of myths and gossip and foreclosure is no exception. One of the most common myths in foreclosure is the one that banks want your house so they can resell it at a profit.
This is just not true; banks are in the business of lending money, not real estate. True, when they are forced to repossess a home they do resell it to try and get their money back, but they don’t make anywhere near as much as they would have, had the loan continued. That is why you should be quick to seek help from the bank as soon as you know there could be difficulty paying up.
Some people think that the bank won’t accept their payments and there is nothing they can do. This myth may have sprung from people trying to make a partial payment without contacting the bank first. A bank – or any lender – wants the full payment agreed upon at settlement, not a portion of it.
Another myth that is current is that you have to move out on the same day you receive the foreclosure notice. Nothing could be further from the truth. The wheels turn slowly and you could have up to 12 months before you need to move out.
Some people also believe the myth that if they file for bankruptcy it will save their house. It won’t. Filing for Chapter 13 bankruptcy will delay foreclosure proceedings, but you still need to do something else to save the house…like pay for it.
People may also believe that once the bank has their house, that is the end of all their debt. This is not necessarily true. The bank is legally able to file a deficiency notice on you if they don’t get enough from the sale of the house to cover their debt. This option is not always taken up, but it is sometimes.
And if you’ve heard that once foreclosure has started it cannot be stopped even if you somehow pay all you owe them, then that is a myth too. Banks are legally obliged to accept the money and stop foreclosure.
Another myth is that when the bank takes your house, they can also take all your goods. That is not true. If it can be carried, it can be taken with you when you go. If it is attached to the house, then it should be left. There is also a myth flying around about the legal fees. Just because the bank started the process does not mean that they are responsible for the legal fees. You are and if that doesn’t seem fair, remember that it was not the bank that started it at all; it was your late or missing payments.
