| "> | | | | upcoming court date and ask that they show up. |
| This short sale foreclosure process takes quite a long | | | | However, many homeowners fail to show up in court |
| time before a property is sold at the sheriff's auction | | | | to fight for their property. Some don't know the laws |
| and even, in some cases, before the homeowners are | | | | very well and could even be concerned that they'll be |
| evicted from the property. Even so it's still a good | | | | arrested for a bad debt. This can be because they |
| chance for real estate investors to pick up properties | | | | are ashamed or afraid. |
| at a discount along every step of the way. Every | | | | If the homeowner presents a good case in court or |
| state and county has slightly different rules concerning | | | | even if the homeowners just show up and provide |
| the sale of pre-foreclosures and short sale investing, | | | | their foreclosure information, there is a good chance |
| but there is a basic process that each follows. | | | | that the court will provide the homeowners with a few |
| It Starts with the Homeowner | | | | more months to try and catch up their mortgage or |
| A bank is often the lender, which lends the buyer | | | | make arrangements. |
| money to purchase a home based on their job, down | | | | The court may also decide to award the property to |
| payment and credit history to purchase a home. In | | | | the bank, especially if this property has gone to court |
| return the buyer agrees to a home mortgage with that | | | | previously or the homeowner doesn't even show up to |
| bank to begin paying back the loan with interest. The | | | | state their case. |
| bank makes money because the loan accrues interest | | | | The Property Goes up at Auction |
| over the lifetime of the mortgage. The buyer becomes | | | | After the bank forecloses on the property it goes to |
| a homeowner and everyone is happy. | | | | the Sheriff's Auction, also known as a Foreclosure |
| Should the buyer turned homeowner stop paying back | | | | Sale or Trustee Sale. This auction is a part of the short |
| the loan through the mortgage, the bank has a safety | | | | sale foreclosure process and can be anywhere from |
| net in being able to take ownership of the | | | | a few weeks to several months from the time the |
| homeowner's property. | | | | bank has foreclosed on the property. |
| Taking back the home is called a foreclosure. The | | | | There are several different popular methods for |
| short sale foreclosure process is initiated by the bank | | | | holding a Sheriff's Auction, but the most popular is held |
| when the homeowner has stopped making payments | | | | right on the courthouse steps. The opening bid on each |
| on the home mortgage. The bank may wait an | | | | property is often equal to the remaining loan balance |
| extended period of time before beginning the | | | | that the bank is owed, plus interest accrued and any |
| foreclosure, allowing anywhere from 3 to 6 months for | | | | additional fees associated with the Sheriff's Auction. |
| the homeowner to begin making payments on the | | | | The county clerk auctions of the foreclosures one |
| mortgage again. It's a messy, lengthy process and the | | | | after the other by property number to the public. The |
| loss mitigation officers must consider property the | | | | highest bidder wins that property. |
| bank owns to be a non-performing asset. The bank | | | | At this point, short sale investing is bunk. If you still want |
| would prefer not to take a property back in | | | | that property you'll need to wear the hat of a |
| foreclosure. | | | | foreclosure investor and get right in there with the |
| The Bank Initiates a Foreclosure | | | | bidding. |
| During pre-foreclosure the trustee appointed by the | | | | When it Doesn't Sell at Auction |
| bank, usually a local attorney, prepares for a | | | | The auction is the last part of the short sale |
| foreclosure. A foreclosure is begun when the bank | | | | foreclosure process, if no one bids high enough to |
| files a Notice of Default through a trustee with the | | | | meet what the bank sets on the foreclosed property it |
| County Recorder's Office. This notice lets the county | | | | is purchased by the bank's trustee and becomes a |
| and the homeowners know that the bank is getting | | | | bank owned property. It is called, 'Real Estate Owned' |
| ready to foreclose on their property. In short sale | | | | or REO at this point and usually sits on the banks |
| investing the home is now considered to be in | | | | portfolio until the bank can get it sold to a |
| pre-foreclosure. | | | | post-foreclosure investor. |
| The bank trustee makes every reasonable effort to | | | | When an investor bids on this REO property and wins |
| contact the homeowners and let them know about | | | | it they are winning the Trustee's Deed to the property. |
| the upcoming short sale foreclosure. This can be done | | | | They become the owner and can do with the |
| by posting the Notice of Default on their property, | | | | property as they wish. Sometimes the homeowners |
| sending it in the mail and also placing it in the classifieds | | | | may still be living in the property after it is sold at |
| of the local newspapers. The trustee may also call the | | | | auction in the short sale foreclosure process. In this |
| homeowner to see if they can work out payment | | | | case the new owner may wish to work out a rental |
| arrangements to get the mortgage back on track. | | | | agreement with the homeowners, or ask the |
| If the mortgage loan isn't brought up to date in this 3 | | | | homeowners to leave. |
| month period the trustee files a Notice of Sale with the | | | | If the homeowners refuse to leave then the new |
| County Recorder's Office. This Notice of Sale is also | | | | owner can evict them. It's time to file an eviction notice |
| posted at the homeowner's property and placed in the | | | | with the country sheriff to start the short sale |
| local newspaper classifieds. | | | | foreclosure process. Usually within 4-6 weeks the |
| The Bank takes it to Court | | | | sheriff comes out to forcibly evict the former |
| Some states require that the bank go to court during | | | | homeowners. However, eviction happens several |
| the foreclosure and sue the homeowner for their | | | | months to a year after the bank sent the home into |
| property as part of the short sale foreclosure process. | | | | pre-foreclosure. Most homeowners have plenty of |
| This process can further lengthen the pre-foreclosure | | | | time to make other arrangements and have either left |
| period which is a good thing in short sale investing. The | | | | or are in the process of leaving when the property is |
| short sale process can be a little lengthy itself, so the | | | | sold at auction. |
| more time you have to put together a deal, the better. | | | | The short sale foreclosure process is a lengthy one, |
| The bank's trustee will have to notify the homeowners | | | | but it provides lots of time for short sale investing to |
| as part of the short sale foreclosure process, of the | | | | take place before that sheriff's auction. |