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Dowtin, Other/Just Looking in silverspring

Will someone explain the progression of a property in trouble? Is it short sale, REO, forclosure, auction?

Asked by Dowtin, silverspring Sat Oct 20, 2007

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The Foreclosure process differs from state to state. But to be general (never a good idea in real estate!-consult an attorney for legal adivce regarding this process!!) the homeowner/property owner (could be owner occupied or investor) either becomes late or stops making payments on the loans secured on the subject property. The lender inturn will hang with you for a while but will then file a notice of Default. So in your scenario above it would go this way: Notice of Default filed. This could be a "pre-foreclosure" sale situation where the Seller is trying to sell the property to save any equity remaining or NOT get hit with the big credit ding of a foreclosure. The "pre-foreclosure" sales could begin BEFORE a notice of default. The may attempt an "Auction" to gather interest, create some excitement and generate a sale. If this doesn't happen and they realize the price their property will fetch is BELOW the amount of loans on the property or after all sales costs they don't have the money to pay loan balances, we have a "Short Sale" situation. If this cannot be negociated with the lender and/or no offer is forthcoming the property will go to "Sale" thus a "Foreclosure". Usually in the greatest state of California this is 122 days from the notice of default. The lender my decide NOT to sell and hold this off if a short-sale looks promising or is in the works. Once the lender "Forecloses" they may "sell" the "Foreclosed" property on the courtsteps to an investor at any amount they so desire to get the property "off the books". If they retain the property and put it back on the market it becomes an "REO" or real estate owned by the lender. You then can go and present an offer to the lender at this time through the Realtor/Agent they decide to use to liquidate this property. The lenders at this time offer concessions, usually but not always, and LOVE first time homeowners. That's the process minus a ton of other facts and nuances associated with the process. Hope this helps!!
2 votes Thank Flag Link Sat Oct 20, 2007
Hello, This is Joan Meyers with Guarantee Real Estate in Fresno, Ca.
This is according to California practices.
The progression is short sale, foreclosure, REO..
A homeowner that falls behind in their mortgage is served with a NOD, or Nortice of Defualt, within a couple of months of a missed payment. This varies with lenders...some may issue this notice right after a missed payment..
After 3 months of recording the NOD a sale date is set.
20 days before the sale 'Notice of Trustees' sale is posted and publiushed.
Five days before the sale date the homeowners right to reinstate expires.
The home becomes bank owned or REO (real estate owned.) An attempt is made to sell it at auction on the 'courthouse steps' If not sold the lender tries to market it generally by placing it with a real estate company.
Hope this helps! Feel free to contact me with any other questions.
Web Reference: http://www.joanmeyers.net
1 vote Thank Flag Link Sat Oct 20, 2007
Here is what happens. The owner stops paying and the their is an Notice of Default filed on title. This is what we call the pre-foreclosure process. If the owner doens't have equity and needs to sell, this is called a short sale. if the owner fails to sell and doesn't pay the payments, then their is a Notice of Trustee sale filed on title. Then the home goes to auction and if nobody buys it it's considered a foreclosure home or REO which means bank owned.
0 votes Thank Flag Link Sun Oct 21, 2007
Really short sale is different from the others. Not all homes will have a short sale. Short sale is similar to being "upside down" on what you owe verses what it is worth. A short sale is negotiating with the lender to "short" them on the full payment owed.
Ruth
0 votes Thank Flag Link Sat Oct 20, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
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