Winner at vw showI’ve heard it said that the word FEAR is an acronym for False Evidence Appearing Real.

And if you’re facing foreclosure, it’s a helpful acronym to remember.

A property owner who’s in the process of readying a property for a short sale called this morning. The absolute terror in her voice was palpable.

It seems the bank had called her husband and threatened to not only sue them, but garnish his wages.

And he believed them.

Their subsequent panic caused them to imagine all sorts of horrors; including sleeping under a bridge and living out of a VW van. This, when they’ve already found a place to rent and have moved in.

While I’m not an attorney, it’s important to bear in mind that Minnesota, Alaska, Arizona, California, Connecticut, Florida, Idaho, North Carolina, North Dakota, Texas, Utah and Washington are non-recourse loan states.

In other words, the bank can’t come after them for any remaining debt after a short sale or foreclosure. The debt is tied exclusively to the property, not the owner; unless that indebtedness is the result of a second mortgage or Home Equity Line of Credit (HELOC).

The bank’s collection agent, of course, wants to recoup as much money as possible for the bank. And But they have to do so within the confines of the law.

Remember,  if your property is in the process of foreclosure, the very worst thing that can happen is the bank takes ownership, your credit is damaged for seven years and you may owe some taxes on the part of the property that was an investment.

Granted, those aren’t anything to take lightly. But life will get better once you get out of a mortgage you can no longer afford.

There is hope and life after a short sale or foreclosure. Things will get better. I promise.