My wife's home was foreclosed in April 2007. This was the home she purchased in 2001 before we met. Everything was going just fine for her, good credit, on-time payments. When she and I married in 2006 she put her house up for sale as she was moving from the Detroit area and we now live in my house about 100 miles away. It could not have been worse timing, as the housing market went completely cold. Our real estate broker(s) couldn't even get lookers, as there already many houses for sale (and lots of foreclosures) on her street and neighborhood. After a failed Pre-Foreclosure Sale (hers was an FHA loan) and over a year of being up for sale, we gave up, stopped making payments, and let it go to foreclosure. We tried to do the right things to resolve it before just letting go, and now I'm sure her credit has been damaged.

Is there anything we can do to help minimize that damage, or repair her credit? Would it be worth it to send a letter to the credit bureau explaining why there is a foreclosure like what I explained above? We are currently carrying NO debt right now except for my mortgage but her name is not on that.

FYI - The house that she bought in 2001 for 72,000 ended up being sold in Nov 2007 for 22,500... a common drop other houses in that area.

The credit bureaus don't care WHY the home was foreclosed. They only record the fact of the foreclosure.

Was the balance of the mortgage satisfied by the sale? If not, the bank may be coming after her for the balance.

If this is the only blot on her credit, it shouldn't be too bad. The question will only come up if she applies for additional credit.