As someone who consults with a lot of folks facing foreclosure, I’ve become accustomed to the high number who are living in denial about their situation. While I realize forecosure is an unpleasant and emotional situation for the homeowner, there are remedies to stop or at least minimize the repercussions of this event. Burying your head in the sand and thinking it will work out, or just letting the foreclosure take place is not a remedy. It’s probably the worst thing you can do for yourself and your future.

There is a widespread belief among homeowners that “letting the foreclosure happen” is the best choice, and it will solve their problem of being upside down in a home or stuck with unbearable payments. They believe their debt will be erased. The truth is, a foreclosure does not end your financial obligation to the bank. It is rare today for a foreclosure sale to net enough proceeds to satisfy the liens on the property. Here in Connecticut, the banks have the right (and the will) to pursue you for the difference between what you owed on the home, and what it eventually sold for.

And let’s not forget about the foreclosure itself. The moment the bank files their lis pendens (the first step in the foreclosure process) your foreclosure becomes public information. It won’t be long before the phone starts ringing, the letters start coming in, and people may even stop by your home. Everyone wants to get a deal on a home, and when they know you have a home headed to foreclosure, you’ll be surprised how many people will appear out of the woodwork.

If you decide to stick it through all this, in several weeks your foreclosure sale gets advertised in all the major newspapers. A foreclosure sign goes on your front lawn. They will have an auction in your front yard and your home will be sold to the highest bidder. If you’re still in the house, now you’ll be evicted. If you don’t comply eventually the sheriff will show up and throw you, your family, and your belongings out in the street. Literally. Doesn’t sound pleasant does it?

Or maybe you just moved out because you knew what was coming. Now the foreclosure happens, you’ve thrown your credit in the garbage for the next 7-10 years, and guess what? You still owe the bank money, and if you have any means, they will come after you for what they’re owed.

Did you know you had other options all along? As soon as you realized you weren’t going to be able to make the payments anymore, you could have picked up the phone and called your lender. They may work with you. Loan modifications are common nowadays. Sometimes your lender won’t modify your loan, or your financial situation may leave you with no hope of carrying the home any longer. At that point it’s time to call a real estate professional with experience dealing with foreclosures. A short sale may be your next best solution. The right person can negotiate with the bank to get you out of the home without a foreclosure, salvage some of your credit ( a short sale generally carries only a 2 year penalty ), and most of the time, if the bank has agreed to a short sale, the odds of them pursuing you for the deficiency are far lesser.

It’s a win-win for everyone. The bank doesn’t want to own another home, and you minimize the losses and public humiliation associated with going through the foreclosure.

However, nothing happens when you bury your head in the sand and pretend the problem doesn’t exist. Don’t make that mistake!

I am a real estate professional that helps people facing foreclosure. If you need help with your foreclosure situation, contact me.

-Minna Javanainen