I was recently doing a mortgage application for a client. I noticed an item on the credit report that looked like it was mortgage related, but they had indicated they lost a home in a foreclosure action four years ago.
They shared with me, that they had chosen not to file bankruptcy, since the home they owned was pretty much the extent of their debt. There was a second mortgage holder that got foreclosed out. Even though there was a foreclosure, it doesn’t mean that the note was extinguished. The note holder sued them and got a judgment to the tune of $36,000.
Since they had worked on improving their credit, they didn’t want to file a bankruptcy, so they are making payments on the obligation for the next 10 years.
There are more and more of these situation happening all the time.
