As someone who hs personnally recovered from a foreclosure back in 1994, I think I have something to contribute. The foreclosure stayed on my credit history for 7 years, but I was able to begin rebuilding my credit after about 3. At first I was the equivalent of a junk bond, then by 4 years I was about a B. Granted, I probably wouldn’t have been able to get a mortgage until after the 7 years, but I was able to get a used car loan in 1997.
Couple of comments about the situation: bear in mind that the clock doesn’t start ticking until after the judgement has been filed. I made my last mortgage payment in April 1993 after a DISASTEROUS year renting the place out; my judgement wasn’t final until Sept 1994. The other point I have to make is you CAN recover from this. I was an undergrad while I was trying to keep the home above water, foreclosure occered in my senior year, and I reconstructed during medical school. Now my credit rating last time I checked was 809, well into AAA category. I used to think the home purchase/foreclosure was the worst thing that ever happened to me, but now I look at it as a situation where I was saved from making a purchase now which could have been an order of magnitude worse.
I believe the correction must come, and while it will be painful, the majority of people will recover from it, and hopefully be the wiser as a result. My only question is what kind of condition the financial community will be in as a result. I have a feeling it’s going to look quite a bit different than it does today.
