Financing in New York>Question Details

Robint, Home Buyer in Indianapolis, IN

Is defaulting on a timeshare the same as foreclosure. Can I be approved for mortgage shortly after settling the outstanding debt on a timeshare?

Asked by Robint, Indianapolis, IN Thu Feb 7, 2013

My husband defaulted on timeshare unfortunately back in 2009. We are now in the position to settle the debt. The timeshare company said it would note our credit report as ZERO balance paid in full. We were told by a builders' mortgage company that even with this verbiage on our credit report we still have to wait 3 years before we would be able to be approved for mortgage because defaulting on a timeshare is the same as a foreclosure. This is the only thing on our credit that is preventing us from building. Is this true?

Help the community by answering this question:


FHA financing does not considered this a foreclosure, they consider it defaulted on consumer debt. However each lender may have their own interpretation that it is still considered a foreclosure, it will just vary depending on the lender. So what you have been told is just that lender's guidelines, but other lenders can be OK with it.

Here is the exact information from FHA which says it is not considered a foreclosure (hopefully you can send the lender this link and they'll reconsider):…

Q: When underwriting the credit of an FHA borrower, should a foreclosure on a timeshare be considered a foreclosure on a mortgage or an unpaid consumer debt?

A: In the FHA underwriting process the default or foreclosure of a timeshare should be considered an unpaid consumer debt and not a foreclosure of a mortgage.

Shane Milne | Lending in all 50 states | NMLS #81195
shane@thebesthomeloans | 949-273-4161 direct
2 votes Thank Flag Link Fri Feb 8, 2013
Thank Goodness- I cant wait til my hubby wakes up, to share with him all of this amazing knowledge- Might be able to own our dream home after all! This was in 2013, wonder if its changed...hmmm?
Flag Wed May 7, 2014
I think this article will help you
0 votes Thank Flag Link Wed Dec 4, 2013
You should meet with a local and trusted loan officer who can guide you. Most banks do not consider times share defaults as foreclosures. The 3 years has passed if it was in 2009. Get a professional opinion from the loan officer regarding your mortgage and perhaps check your state law on how long they can collect after the default for the timeshare in your state.
0 votes Thank Flag Link Wed Jun 12, 2013
Without a doubt, timeshare cancellation is the best option to get rid of an unwanted timeshare. Once the timeshare contract is properly cancelled, there are no further financial obligations attached to the resort, which means:

No more calls
No more timeshare maintenance fees
No more timeshare debt
No more special assessment fees
0 votes Thank Flag Link Wed Jun 12, 2013
This question should, of course, be addressed to a lawyer. My intuitive answer is that default is default, whether it is in a credit card, a mortgage, or a time share
0 votes Thank Flag Link Fri Feb 8, 2013
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