The following are some of the actual consequences of foreclosure that can affect a person's or a family's financial future. They can also cause severe financial and emotional damage which can last for many years.

Loss of Equity
Currently an owner in foreclosure who cannot reinstate his/her loan by making up the late payments has only two options;

1. Sell the property to a foreclosure profit speculator for what is typically pennies on the dollar. In doing so, most if not all of the property equity is lost.
   
   
2. Lose the property to a trustee's foreclosure sale. This usually yields little or no equity for the owner at all.

Credit Problems
When a foreclosure occurs the event can cause serious damage to an owner's credit rating. The foreclosure action is recorded and can stay on the owner's credit report for many years.

Expensive Credit
A foreclosure can really damage a person's credit. A bad credit rating makes future lending very difficult and sometimes impossible to obtain. The cost of future borrowing on any type of loan or credit cards will be more expensive due to the higher interest rates that lenders will charge. Years and years of limited and expensive credit is a long term consequence of foreclosure. It makes the total cost of a foreclosure very high and a financial recovery extremely difficult.

Tax Problems
A foreclosure causes a property title transfer and tax assessment. If an owner has taken out equity loans against a property's appreciation and those loans are not paid back, it is considered to be profit taking. Those loans are taxable and the owner must deal with any capital gains tax that might be due on the profit. Most property owners do not realize that they can trigger a capital gain tax assessment when their property is lost to foreclosure.

Junior Lien Problems
Sometimes when a foreclosure occurs on a property, the security for a junior lien lender is "wiped-out". However, even when the security has been lost, there are some loans that the lender can force collection on through a court action. This type of debt collection can cause severe financial pain in the future.