Archive for February 9th, 2011

Foreclosure -basics

Yesterday I wrote about Short Sale basics, today will be about Foreclosures.

A foreclosure is the legal process for the termination of a loan and the securing of the property by the bank and or other lenders.

This will not happen unless you miss a payment or stop paying all together. In pre-foreclosure there are certain “work-out” steps that can be taken to avoid foreclosure. One is a loan modification where the lender will rework part or all of the loan by either lowering monthly payments and extending the loan out another 10 years, or depending on the type of loan another arrangement may be worked out. Another way is forbearance (similar if not the same as a loan mod.) where there is postponement of payments or reduced payments for a period of time. In rare cases there is bailout loan but 65% loan to value is needed. There is also the short sale, which we discussed in yesterday’s post.

If none of the above can be worked out the foreclosure process is started with a letter of acceleration with the request that loan be made current. If no payments or attempts to correct are made within 60 days than a notice to accelerate is sent, whereby all past due payments plus late fees must be paid.

If still not response than a Demand Letter is sent and is usually from the lenders lawyer formally notifying you that the foreclosure process is now going through the courts.

If after the Demand Letter you have not paid up the lender then files foreclosure notice with the court. You have 20-30 days to respond. A public notice of default is then put in the paper once a week for three weeks stating that the property is in default and lists the amount owed and the sale date/place/time. A notice is also posted on the house (front door/window).

If property is not sold beforehand or loan is not brought current it is auctioned off at a Sheriffs Sale. If the property does not sell at the auction then it goes back to the lender. It is then put on the market for sale as a bank owned property otherwise known as an REO.  And that will be tomorrow’s topic!

If you have any questions or comments please feel free to post or e-mail me: mary@heritagewifi.com or www.BoiseRealEstateChick.com

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