"Kelly, I'm sorry to say, but you have been fed a bunch of bullsh*t about foreclosure," I said bluntly. For just a moment, she looked at me in disbelief, as if I had just forced her entire world to crumble. To that she replied, "What do you mean by that?"

Kelly seriously believed her bank never would foreclose on her, no matter what. Apparently, some "expert" had convinced her that foreclosures cost banks too much money. Therefore, banks will not foreclose.

All the while she boasted about being "foreclosure proof," I sat there, listening, wondering if I really were hearing this or stuck in DiCaprio's hit movie, Inception.

As best I could, I explained reality to Kelly, pleading with her not to believe me but to talk with any real estate attorney. And then it got me thinking about all the other people just like Kelly who have been brainwashed into believing myths about foreclosure.

It is dangerous foreclosure myths that leave some families homeless. With that, you are about to discover 5 potentially dangerous foreclosure beliefs. Facing foreclosure with outdated or inaccurate information could cost you a house. Every day in Sarasota, FL, I talk with people desperate to avoid foreclosure. What concerns me the most are the dangerous mistaken beliefs some people hold about foreclosure.

By far, the #1 mistaken belief I hear is that the bank cannot foreclose on my house because I have homestead. Bottom line is this: if you are not paying your mortgage, the bank can and will foreclose. How quickly the bank kicks you out with or without the help of the Sheriff depends on your foreclosure (delay) strategy. Whether or not what's "right" matters to you, some homeowners have delayed foreclosure for up to 31 months (that's the longest delay I personally have seen).

The second biggest misnomer is: "I have to do everything I possibly can to save my home - it's all I have!" At the other end of the spectrum are the people who cannot let go their "house" because it's their "home." They will bankrupt themselves throwing their last penny at a house with an exploding mortgage payment the mortgage banker refuses to modify. Each homeowner has to decide (hopefully by consulting with a tax professional and a real estate attorney) what the best option is for you.

Number 3 originates from bankruptcy attorneys who seem to think everyone needs at least one bankruptcy before the world is a better place. People tell me, "All I have to do is file bankruptcy, and the mortgage company cannot take my house." Similar to #1, if you don't pay your mortgage, BK might delay foreclosure. Eventually the bank will take your house. I've seen better ways to delay foreclosure without filing for bankruptcy, turning you into a credit leper for a few years.

#4 misnomer defies logic. People correctly believe foreclosing costs the bank A LOT of money. That's correct. What's not correct is hearing these same people say that banks will not foreclose if the homeowner pay them something each month. Unless you have a forbearance agreement, once you go 30 days late, the bank will "accelerate" your mortgage, making the full balance due. I've not seen any bank allow partial payment to stop foreclosure. It's reported a judicial foreclosure costs a debt owner around $50,000. So yes, foreclosure is expensive. However, you will go broke waiting for a bank to behave logically. More than once, I've handed a bank a fair market offer the bank rejects, only to foreclosure and sell the house for $20,000 - $30,000 LESS than the offer I gave them. Banks don't behave logically!

Worst of all, some people believe the worst that can happen is to have the bank "steal" your home. #5 might be the most dangerous misnomer of all. I hear people say, "Once the bank forecloses on my house, they can never bother me again." I'm sorry to say that's not true. Now more than ever, debt owners (banks) are not releasing you from the debt. In some cases, debt owners appear to be tricking borrowers into thinking they're free and clear of deficiency. In Florida, debt owners have up to 5 years to record judgment against you for deficiency amount. A judgment (in Florida) can strangle you for up to 20 years. Walking away or letting the bank foreclose is NOT the way to go for this reason alone.

These are just 5 of the potentially dangerous (and costly) myths causing some people to lose their homes and get chased by debt collectors for years. If you or someone you know is facing foreclosure, please get accurate information. If you or someone you know wants to buy or sell a house in or around Sarasota, FL, please contact me now.