Duarte/Downey Real Estate Agency, Inc



Posted by Duarte/Downey Real Estate Agency, Inc on 5/7/2017

What Is A Foreclosure?

A foreclosure is what happens when a property owner cannot make the required monthly mortgage payments for the property loan. This lapse in payment leads to the property being seized and then sold by the bank to make up for the loan deficit.   


During the process of foreclosure, the homeowner does have the opportunity to make the loan current and avoid giving up their property. 


The Process


When mortgage payments have been missed for 3-6 months, the lender will order what is called a Notice Of Default (NOD). This is the official notice that the homeowner is facing foreclosure. This notice begins the reinstatement period where the homeowner has the opportunity to make his account current. This period lasts up to about 5 days before the home is auctioned off. 


If the defaulted loan is not corrected within 3 months, then a foreclosure state is established. At this point, a notice of sale will be given to the homeowner and it will also be posted on the property as an official document. The sale of the home is “advertised” in local news sources, typically over a three-week period.


Where The Sale Occurs


The sale of the foreclosed home usually occurs at the local county courthouse where the property is located. The details of the sale are located on the Notice Of Sale document. The sale is conducted as an auction in public, given to the highest bidder. A cash deposit must be made up front and the remainder of the price must typically be paid within 24 hours. The winner of the auction receives the deed to the property.


The Auction


With a foreclosure auction, the opening bid is set by the lender. This starting number is usually equal to whatever the outstanding loan balance is including the interest and additional fees including attorney’s fees. If there are no bids higher than the opening bid, the property is purchased by the lender via the lender’s attorney. This makes the property known as “Real Estate Owned.” 


Problems With Buying Foreclosures


One thing to be aware of when you’re considering buying a foreclosure is that the amount owed on the property can actually be more than the property itself is worth. Any liens excluding property taxes are typically voided at the time of purchase of a foreclosure, which is a slight bonus to a buyer.

 

The other issue with buying a foreclosed property is that you need quite a bit of cash up front in order to purchase the property. This is why buying a foreclosure may not be for everyone.


While no one wants to face losing their own property to foreclosure, getting a foreclosure notice isn’t the end of the road for homeowners. You’ll still have a few chances to make things right. If you’re looking to buy a foreclosed property, you really need to understand the ins and outs of what you’re getting yourself into before you make a bid.





Posted by Duarte/Downey Real Estate Agency, Inc on 6/10/2012

When a homeowner first buys their home foreclosure is probably the furthest thing from their mind. Today’s economy has forced millions of homeowners into a potential foreclosure situation. There are many reasons why people go into foreclosure. Some of those reasons include:

  • Job loss
  • Unexpected death, illness or medical emergency
  • Adjustable rate mortgage increase
  • Unexpected home maintenance expense
There are ways to avoid foreclosure. The best way to avoid foreclosure is to prevent the filing of a Notice of Default. If a home owner knows they are unable to pay their mortgage they should immediately call their lender. Lenders do not want to foreclose. They may be willing to work with the home owner but it is important that the home owner doesn’t ignore contact from the lender. The lender may propose several options:
  • Forbearance
    • Lenders may agree to a repayment plan before taking legal action
  • Debt Forgiveness
    • Very rarely the lender might give you a break and waive your obligation.
  • Repayment plan
    • The lender may agree to spread the payments out over a longer loan term.
  • Modification
    • In some cases, the lender may agree to freeze the interest rate of an adjustable rate loan or extend the amortization period.
  • Refinance
    • Adding payments to an existing loan balance may be an option if the homeowner has sufficient equity and meet the lender’s guidelines for refinance.
  • Partial Claim
    • Certain government loans may contain provisions that allow the homeowner to apply for another loan to pay back missed payments.
Preventing the Notice of Default filing is the best way to prevent foreclosure. If none of the above options have worked there are still some options a homeowner can leverage. Once the Notice of Default is filed, the homeowner only has a small time frame to reinstate the loan by bringing the payments current and pay the costs of filing the foreclosure. If you are unable to make up the payments you still have a few options:
  • Sell your home
    • If you have equity in your home a quick sale is probably the best option at this point. Your home will need the best exposure and marketing to achieve the quickest sale possible.  A full marketing plan and the proper price positioning should get your home sold in time to avoid foreclosure.
  • Attempt a short sale
    • If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale is when you sell your home for less than what the amount owed.  A short sale will affect your credit rating but not as bad as a foreclosure. A short sale is negotiated with the lender.
  • Deed in lieu
    • The homeowner deeds the property back to the lender by giving the lender a properly prepared and notarized deed, and the lender forgives the mortgage.
For more information on how to prevent foreclosure visit the U.S. Department of Housing and Urban Development site to Avoiding Foreclosure. http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure