Foreclosure Process
You are probably interested in saving money by purchasing a foreclosure, hence the reason you are reading this article. Lots of people have many misconceptions about purchasing foreclosure properties. Going after a foreclosure is smart, however, it is important to educate yourself about the process. The majority of residential home mortgages in California are made using a trust deed. Using trust deeds allows foreclosures to go through a smooth process of a trustee sale. Luckily, California’s foreclosures can go through this process as opposed to the judicial foreclosure process; these types of foreclosures can take up to a year to complete. Whereas, trustee sales can be complete in as little as 3.5 months. The home owner in default has the right to redemption within 5 days before the trustee sale. This just means that the owner has the right to reclaim their property if they can bring their loan current; this would cancel the foreclosure process. In most instances, banks are willing to work with the borrowers to avoid the foreclosure process.
Step #1: Notice of Default
Typically, a bank will begin the foreclosure process immediately after the borrower defaults two payments in a row; this records with the county recorder. This is the time when a borrower may apply for a short sale.
Step#2: Short Sales
Short sales occur when the bank forgives part of the loan in order to sell the property. The majority of upside down homes will result in short sales. This means, short sales occur if the owner does not have equity in the property; the bank and the owner agree to a short sale where they would agree to let go of some of the debt upon sale of the property. Short sales should go through a licensed real estate agent who specializes in short sales and foreclosures. All offers made on a short sale property need to be approved by the bank in order to close escrow with a clear title.
Step#3: Trustee Sale
Once a mortgage is delinquent a NOD, otherwise known as a notice of default is recorded with county recorder’s office. If the mortgage is not brought current on the 91st day, the lender will record a NTS, which stands for Notice of Trustee’s Sale. Notices of trustee sales as well as Notice of Defaults are published in local newspapers with an auction date. Auction dates are at least 21 days after the notice of trustee sales are made. Up until five days before the trustee sale, the owner is allowed to retain legal ownership of their property by paying the loan in full. If the owner decided to do this, the foreclosure process would be terminated. Starting bids begin at the amount owed on the property, plus legal fees, delinquent fees, late fees, court cost, processing fees, evictions fees. Trustee sales are a good place to find good deals; however, you must be very educated in how they work. First you must bring all cash to trustee sales; second you need to be aware of liens on the property before you engage in bidding on it.
Step#4: Bank Owned Property
If nobody takes the minimum bid at an auction for a property, then the property goes back to the bank. At this point the bank can choose how to sell the property and for how much, these are the properties you have heard about called bank owned properties, or REO properties, otherwise known as real estate owned, these properties can also be referred to as corporate owned homes. Majority of banks will use an experienced real estate agent who specializes in REO’s. The agents then proceed with the bank owned home just as if it were any other listing. The home is put on the MLS, which stands for the Multiple Listing Service and marketed until SOLD!
Step#5: Finding a Foreclosure and Bank Owned Specialist!
If you want to find a great deal on a foreclosure property your best bet would be contacting a real estate agent since we have access to the Multiple Listing Service and can find the deals the minute they come out! Contact Shannon Bressem, she is a licensed real estate agent who is short sale and in foreclosure certified! Martin and Shannon work on a team specializing in short sales and foreclosures! If you want to make sure you get the best deal when buying a home, be sure to contact us. We are certified and we are here to help!
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