Foreclosure creats great financial loss for the lender and the owner and it is much like a bankruptcy and will have a negative impact on the owner for the next 7-10 years. I advise folks looking at foreclosure to ponder other options like short sale deals. Generally, a short sale is where the primary lender agrees to accept a payoff of a lesser amount than what is owned on the property, normally 82% of the appraised value. I recently assisted a client with a short sale deal and the client walked away paying only .43 cents at closing. The beauty of this is the client will be able to apply for another FHA loan after three years and the client's credit is not destroyed. Although the bank is taking less to payoff it's loan, the savings is far greater to the bank then a foreclosure. I see it as a win/win solution for all parties involved.

Foreclosure ruins your credit history for seven years. Although it does not stay in your credit history forever, but it will lower your credit score and it will take some time for you to re-establish it. As we know having low credit score guarantees that you get higher interest rates on loans, credit cards and etc. They say if your credit score is below 600 you pay 3% higher rates comparing to somebody with credit score above 700. You could get denied also...

Bina....

Yes there is a financial loss to the lender in a foreclosure and the borrower will have a hit on their credit report. It could be anywhere from 150 - 200 points.