Is a loan on a foreclosure, the same as a loan process as a home not forclosed on?

Asked by Daryl Jackson, Philadelphia, PA Mon Sep 8, 2008

I saw a property i was interested in that was in foreclosue. Wat are the differences in the loan process for homes that are in in foreclosure as opposed to homes that are not?

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James Wheeler, , Tampa, FL
Tue Sep 9, 2008
Good question. I assume you're asking about foreclosures vs short sales. The end result of the loan process may be the same (except that many short sales never actually close), but the journey is quite a bit different. If the home you're buying is a post-foreclosure property already owned by a lender or the government, then the process is rather straightforward. The new owner has cleared up the title issues and listed the property with a sales price in mind. The listing agent will be representing the true decision-maker, and the contract negotiations will be more transparent. This means that the loan process is easier too. The terms of your purchase will be defined at an earlier stage, which allows the fully executed contract, appraisal, etc., to be reviewed and approved in underwriting before the 11th hour. In a short sale, many critical steps in the loan process wait until the end. If you think the stress in a short sale is only in getting your purchase price finalized, you're in for a rude awakening.
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Global Prope…, Both Buyer And Seller, Philadelphia, PA
Fri Sep 19, 2008
If you are looking for absolutely the best deals, I would recommend you contact local investors to see what is available. Many times, you will find that the prices actually being negotiated are thousands less than what is in the MLS. I'm working on 3 in the University City area and 10 in the Wilmington de. area. Plenty of deals available, you just need to link to the best source.
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Joanne, Home Buyer, Canton, MA
Fri Sep 12, 2008
As long as it appraises at the right $, a loan is a loan.
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Alina Kanevs…, , Cherry Hill, NJ
Thu Sep 11, 2008
Hey Daryl,
I work as a mortgage banker for a local company in PA/NJ and i have a number of clients that are investors and buy foreclosed properties. The loan process differs by what state of a foreclosure there property is in. Also, if that property is being sold by the short sale company, sherrif sale, or a real estate company higherd by the bank. Also, it differs in the type of financing you have to obtain for yourself. If you want to talk more about this feel free to contact me at any time.

Thank you,

Alina Kanevsky
Lending Specialist

Mid Atlantic Capital
405 Kings Highway South
Cherry Hill, NJ, 08034
Phone: 856-429-2207
Toll Free: 800-232-5171 ext. 501
Fax: 856-429-4118
Cell: 267-474-8050

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0 votes
Casa Latino…, , Palm Beach County, FL
Tue Sep 9, 2008
It's a very good question that I am asked often. The mortgage process would be exactly the same with one exception for short sales. Because of the time it takes for the short sale to be approved by the lender, you may find yourself going through the pre-approval process at least twice. The first time to submit your pre-approval to the short sale lender, and the second time is once the seller's lender approves the deal, as your mortgage proffesional will want to make sure nothing has changed from your initial preapproval.
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Lisa Abrams, Agent, Potomac, MD
Tue Sep 9, 2008
The loan process on a foreclosure is the same as if you are purchasing from a private seller.
Many banks want to see a pre approval from their bank's mortgage department, but that does not obligate you to use their lenders, just get the approval from them and then you are free to use whom ever you want.
If you do use their lenders, they typically will pay for the title insurance, appraisal etc.
Keep in mind, foreclosures are sold "as is" which means you buy the house as you see it, they will not repair, replace or fix any issues.
I have sold many foreclosures, they are a great deal, most times, as long as you are aware of the expenses involved
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John Topa, , Scranton, PA
Tue Sep 9, 2008
Is the house owned by the bank or is the owner in the process of being foreclosed upon? Big difference. If it is bank owned, you can typically buy the home the same way you would any other home.

If it is being foreclosed upon, the owner would have to obtain a payoff statement from the bank and make sure they don't owe more than they are selling for.

Typically the are many attorney fees, late charges, etc. added to a payoff. Make sure this payoff is obtained prior to you paying for inspections, appraisals, etc. Any further questions, please feel free to contact me. 570-344-6091.
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Fred Glick, Agent, Mountain View, CA
Mon Sep 8, 2008
The road map is that if your mortgage payment is not made after say 60-90 days, the lender starts a legal process to get the house in the lenders name. This is called a foreclosure. The house is foreclosed upon when the bank is the winner of a bid for the property at a sheriff sale. The bank then has the deed to the house and no liens or leases with the property because they all have been cleared by the foreclosure.

In other words, a rose called by any other name is still a rose!

Good luck
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Chris and St…, Agent, Philadelphia, PA
Mon Sep 8, 2008
Is pretty much the same. Difference is that as a buyer most foreclosed properties are more banged up and may be more difficult if not impossible to get financing on. Also, if the property is close to going to sheriff sale there is the risk that the deal will blow up if the deal does not settle before the sherfiff sale date.

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