by Joshua Dorkin | BiggerPockets.com | Edited By Carter Crowley
What is a Foreclosure?
A foreclosure occurs when a property owner cannot make principal and/or interest payments on his/her loan, typically leading to the property being seized and sold.
How does a foreclosure occur?
The foreclosure process is not very difficult to understand. There are several stages during which the homeowner has an opportunity to bring the loan current and avoid foreclosure.
After about three to six months of missed payments, the lender orders a trustee to record a Notice of Default (NOD). At the County Recorder’s Office. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.
If the default isn’t corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder’s Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.
The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trustee’s deed to the property.
What Happens at the Foreclosure Auction?
At auction, an opening bid on the property is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale, for the lender.
If this occurs, and the opening bid is not met, the property is deemed a REO or Real Estate Owned. This typically occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender.
When you purchase property at a foreclosure sale, all junior liens other than property taxes are wiped out. Priority of liens is determined by the date of recording. When you purchase a REO aka. Bank REO, you will typically receive the property with a clean title.
Learn How to Avoid Foreclosure from HUD
How to Stop Foreclosure Now?
As a homeowner you have limited options when you are going through the foreclosure process. If you have the funds availible, the best option would be to bring the mortgage payment current. However, most individuals in a foreclosure scenario do not have the extra funding availible. That leaves you with a few other options: sell to a real estate investor or list with a real estate agent. If you want a quick, easy, and painless process to just walk away from the house with your credit intact I would recommend calling us here at CB Home Solutions. We can purchase your house from you in as little as 14 days and you credit will not be destroyed in the process.
If you decide to go the route of listing with a Realtor it may take a bit longer, and there is no guaranteed sale. This may result in the bank eventually taking back the home and finalizing the foreclosure process.
In the end the choice is ultimately yours. We are here to provide information and resources for homeowners needing to get out of foreclosure.
Please contact us today if we can be of assistance: 920-252-6336