What Makes an HUD
Foreclosure Home Different?
There are many advantages
to buying an HUD foreclosure.
How HUD Loans & Programs Can Help Homeowners in Need
The HUD has many programs
to assist those in need. More...
Investing in Bank Owned Foreclosures
Investing in bank owned homes
or REO's can be very profitable.
The Foreclosure Process
From the N.O.D. to the auction.
We discuss the process here.
Tips on Fighting Foreclosure
There are many ways a home-
owner can keep their home.
The Foreclosure Process
The foreclosure process begins when the current homeowner cannot make the mortgage or interest payments on time, which, ultimately, leads to the property being taken back by the lender and sold in the foreclosure process whether by auction or other means.
In this section, we will go through the stages of the foreclosure process in addition to what may be happening on the other end of the foreclosure process through the foreclosure auction process and more.
The foreclosure process really begins once the payments have stopped being made and the lender begins to send out mail to the homeowner about these matters.
It is very important that the homeowner always respond to these letters from the lender as it may help the homeowner find ways of reinstating the property and avoid losing their home.
After about 6 months of non-payment, a Notice of Default (NOD) is usually recorded at the county recorder’s office. This part of the foreclosure process starts the reinstatement period and also starts the process of putting the borrower or homeowner on notice that the foreclosure process has started. If the homeowner does not reinstate the property within the time allotted, in many cases it is around 5 days, then the home will be auctioned off.
Of course, different states do many things differently so it is important to speak with a foreclosure professional in these matters.
If the homeowner does not respond to the Notice of Default during the foreclosure process, a Notice of Sale will then be established and posted on the property which will also be published for about 3 weeks in the local newspaper.
On the Notice of Sale, the time and date of the Trustee Sale, usually done on the courthouse steps, will also be provided for interested parties.
At the foreclosure auction and trustee sale, the lender will provide the opening bid on the property which is usually equal to whatever the outstanding loan balance is, in addition to any unpaid interest and fees involved with the sale of the property.
During the Trustee Sale, the property will go to the highest bidder and must be paid for in cash. Once the money is received, then they will receive the deed to the property.
If no bids higher than that of the opening bidding amount are received for the property, then the property is usually purchased by the attorney conducting the trustee sale.
These procedures may vary from state to state so it would be a good idea to do more research based on your particular state and county before attending any trustee sales or foreclosure auctions.
When a property is not bid on during the foreclosure auction, the property officially becomes an REO or real estate owned.
The reason this may occur is due to the fact that many foreclosed homes are worth much less that than of what is actually OWED to the lender overall and it is obviously not worth it to many if they are overpaying on the property.
Once it becomes an REO, then there will be more opportunities for “short sale” opportunities where the property can be purchased for a far greater discount.
If a person decides to purchase the bank owned foreclosure or REO, then all junior liens are normally wiped out and the title becomes a clean title for the new owner.
There are many opportunities for new homeowners to find a great value on a home due to the foreclosure process on that particular property. So it is very wise to understand how the foreclosure process works and how you can be right there when that property you had your eye on becomes an REO or becomes one of the best deals on the market. But remember, the best deals may not be there for very long so it is always important to be prepared.