How to Let a Bank Foreclose on Your House

Letting the bank foreclose on your home can be a traumatic event, both for your financial condition and for your family.

A bank foreclosure is the process by which a bank reclaims the legal right to a piece of real estate due to the property owner's inability to maintain payments on the property. When a homeowner can no longer make payment on the home, she may determine that it is best to just let the bank foreclose on the property. This is a very serious consideration, since it will have financial ramifications for years to come if allowed to happen.

Instructions

1. Consider the outcome of allowing the bank to foreclose on your house. Your credit score will plummet, which could affect your ability to purchase another home, to rent a home, to get affordable insurance and even to qualify for some jobs.

2. Default on the loan by not making monthly payments on the loan. Although legally responsible to do so, if you wish to allow the home to enter the foreclosure process, you can stop making payments on your loan, which will trigger the foreclosure process to start within 60 days of the initial missed payment.

3. Contact your lender and let it know of your willingness have it foreclose on the property. The lender may be willing to legally take claim of the property sooner, rather than going through the drawn-out process of foreclosure, which can take between six and 12 months to complete.

4. Do consider a short sale, if it is an option that is agreeable to both you and the lender. In a short sale, the property is placed on the market by the homeowner, who sells it for less than its appraised value. The lender agrees to take the loss, and the property is sold to the new buyer for less than the amount that is owed on the property, allowing the borrower to leave the loan behind.

5. Speak with your attorney before you make any decisions on allowing the bank to foreclose on your house, as the lender may take legal action against a homeowner who is intentionally defaulting on a loan with no reason for doing so. It is essential to maintain good legal status throughout this process.

6. Wait for the end of the foreclosure process to happen. The court system will turn over the rights to the property to the lender. This legal scenario can take months to complete and, during that time, various court appearances, legal notices and creditor calls will need to be handled.