real estate news
Understanding the Foreclosure Process
Even if there are some differences in the foreclosure process of every state, a homeowner or a potential buyer has to be familiar with the procedure to be able to made intelligent and informed decisions. There could be some slight variations in the process depending on the city where the house is found so it is important to be knowledgeable about the foreclosure laws in your city and to seek expert advice when you are dealing with the foreclosure process.
The foreclosure process normally requires approximately six months from the time when the homeowner had officially defaulted until the property is repossessed by the bank or lender. The pre-foreclosure stage occurs 30 to 60 days after the borrower fails to come up with one or two mortgage payments. During this period, the lend sends a Demand Letter to the borrower, requiring the outright repayment of the debt, including the associated late payment penalties and legal expenses. If the borrower fails to completely pay the debt within a certain period of time, which is usually 30 days, then the foreclosure process is legally initiated.
A Notice of Default (NOD) is then issued by the lender or the local sheriff and in this certified letter, the bank specifies the amount of debt and last chance solutions for reinstating the loan. A record of the foreclosure notice is made in the appropriate local government unit, a date is specified for the holding of the auction, and this is reported in a local newspaper. Some investors and home buyers usually make some short sale offers to the homeowner during this particular period although it is also possible that similar offers may have been made during pre-foreclosure.
The foreclosure process may be a a power of sale or a judicial sale. The court plays an important role in the judicial sale but in the power of sale, the bank is able to pursue the whole procedure although a judicial review is usually performed to ensure that the actions of the bank are all legal. The opening bid that is set by the bank or lender at the auction is often what it wants to collect, which is the sum of the outstanding loan, legal expenses, accumulated interests and other fees. The property is bought back by the lender if there is no buyer for it during the auction and it therefore becomes real estate owned or REO. For home buyers or investors, purchasing an REO property offers them the advantage of being sure that there are no liens, including tax liens, because the bank takes care of them before listing the home as REO.
Consolidate Your Credit!
