| Foreclosures are said to be the financial epidemic of | | | | should be talking to the lending institution. Calling the |
| our time. There are many reasons that cause people | | | | lender and talking to someone about your situation can |
| to go into pre foreclosure. To name a few: divorce, | | | | be a dreaded, painful experience. But, it is less painful, |
| layoffs, or change in income, illness, or death in the | | | | than having your home taken from you when |
| family. But, the one reason that banks have caused | | | | something could have been worked out. If you are |
| themselves, is from "creative lending". Many times the | | | | honest with the representative, and keep promises you |
| loans require little or nothing down, and have low | | | | make regarding payments, you will find they will be |
| teaser rates with an adjustable mortgage. Then rates | | | | very helpful. |
| shoot skyward after the initial period. There are | | | | There are several ways a home in pre foreclosure |
| already too many foreclosures, but this year promises | | | | can be purchased. The homeowner is the legal owner |
| to bring many more, because the adjustable rates that | | | | of the property until the moment it is sold at auction. |
| were very low are now going up. The first stage of | | | | - Retail sale, with or without a realtor. This is reserved |
| foreclosure is pre foreclosure. Pre foreclosure is | | | | for a very good condition property, with reasonable |
| officially defined as the period from which the bank | | | | cost, and in a seller's market. |
| has notified the homeowner(s) that they are in default, | | | | - A sale, usually to an investor at a lower than normal |
| until the moment the home is sold at auction. However, | | | | market price, but enough to cover loan costs, and |
| even before the bank has notified the owner of | | | | charges. |
| default, there has probably been some problem with | | | | - A sale that involves catching up the arrears, then |
| making the payments on time. This period of time also | | | | taking the property "subject to financing". This is |
| is a pre foreclosure period. A smart homeowner will | | | | making the monthly payments on the loan until the |
| look into all available options at that time. | | | | home is re sold |
| The length of time the homeowner has in this pre | | | | - A sale to an investor when the property has little or |
| foreclosure period depends on the lending institution, | | | | no equity can also be done. The investor works with |
| and the laws of the state. The lending institution may | | | | the bank in getting a "stay" or delay put on the auction, |
| decide it is time to act after two months of late | | | | and negotiates with the bank on an amount that is |
| payments, or maybe six months. Two to three months | | | | lower than what is owed to be the full pay off. This is |
| seems to be typical. The time length that the | | | | called a short sale. |
| homeowner has in the pre foreclosure period is also | | | | - Another way the home can be sold, is by selling the |
| dependent on the laws of the state the property is in. | | | | home to an investor for an agreed upon amount, then |
| See the resource below to find out what type of state | | | | leasing back the home to the previous homeowner for |
| your property is in. There are judicial foreclosure | | | | a certain amount of time. Caution should be used with |
| states, and non-judicial foreclosure states. If you live in | | | | this method because there needs to be complete |
| a non judicial foreclosure state, you can expect an | | | | understanding by all parties, because the homeowner |
| average of about two months from the notice of | | | | no longer owns the home, but continues to live there. |
| default to the auction sale. Also a notice of sale is sent. | | | | (This is illegal in many areas.) |
| This is often about the same time as the default | | | | - Unfortunately, in this market, most homeowners that |
| notice. If the mail is misdirected or delayed, even if the | | | | really need to sell, owe more than their house is now |
| lending institute failed to mail it at the proper time, the | | | | worth. In these cases, the home may be sold by a |
| process still continues. In a non judicial state, the | | | | short sale, instead of letting it go to foreclosure. |
| lender's file on the homeowner's mortgage goes to a | | | | Any of the above methods will save the homeowner's |
| foreclosure lawyer, hired by the lender. At that time | | | | credit, from the credit score plunge of a foreclosure. |
| additional fees, which are the attorney fees are added | | | | The credit report may just show a few late payments, |
| to the amount in arrears. | | | | then a pay off, or continued on time payments after a |
| In a judicial state, the length of time a person can | | | | few late payments. |
| expect to be in the pre foreclosure time period | | | | To find out if you are in a Judicial or Non-Judicial state, |
| averages about six months. The main difference is | | | | click here |
| that in a judicial state the foreclosure goes through the | | | | CAUTION: Before buying any property, but especially |
| court system. Getting a court date and having a | | | | a pre foreclosure do a thorough title check first. All |
| representative of the lending institution present is what | | | | liens stay with the property, and must be paid. This |
| creates the longer time period. Additional fees also | | | | includes second mortgages, lines of credit, tax liens, |
| build up with judicial foreclosures, which have to be | | | | workman's liens and so on. Also, the title check will be |
| paid in order to bring the loan up to date. | | | | to make sure there are no clouds on the title |
| During the pre foreclosure time and the period before | | | | concerning clear ownership. |
| pre foreclosure is official, is when the homeowner | | | | |