I have been researching trying to find real cases of how much a foreclosure has affected credit scores...can anyone with experience post the basics? For example...I was a 650 now I'm a 200 I know that all cases are different and no one can figure out the insane "secret" behind FICO but I think having some real life cases will give us all a good idea of what to expect when faced with Foreclosure. I appreciate your input!
I have seen examples of people's FICO scores dropping anywhere from 100-150 points due to a foreclosure. It will be different for everyone depending upon what else is going on in his or her credit report, and it could even be as high as 200 points for someone who has an excellent credit score in the first place. If your current score is 650, I would plan on watching your score drop to around 550 and maybe even lower.
Even with the new law on foreclosure that forgives the debt.They passed it and it's good for 5 yrs.The only drawback is the irs hasn't decided if will list it as income so you have to wait and see the ruling.So if the debt was forgiven is that to mean that it never was a debt?
As far as I understand it, the Mortgage Forgiveness Debt Relief Act that was recently extended to include debt forgiven through 2012 doesn't change anything when it comes to how the foreclosure will show up on your credit report. Likewise, you would still receive a 1099C from the lender, and so would the IRS. The difference is that now, as long as you meet certain criteria, you won't be on the hook for extra taxes as well. If you're interested, here's a link to a blog post I recently wrote on the topic: Forgiven Debt Now Tax-Free for Many Homeowners
