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Step by Step Guide to Do It Yourself Foreclosure Solutions

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Step by Step Guide to Do It Yourself Foreclosure Solutions Step by step Guide to Do it Yourself Foreclosure Solutions A Step by Step, Do It Yourself Guide to Surviving Foreclosure, Without Filing Bankruptcy or Spending a Fortune in Fees, etc… Thank you for taking for requesting this e-book. Never before has so much information about how to survive foreclosure been put into a single document and written for the homeowner’s benefit. Until now, all of the other books on the market were written to teach people how to buy properties from homeowners like you. Instead of another foreclosure investment guide, This e-book Is to help you, the homeowner, fend off vultures like those and hopefully keep your home (we can help you along the way if you request it) or at least sell it with options. If you want to list your property on a non-exclusive basis, we can also do so. For refinance and/or access to a loan. we will try to get the best lenders for you The control will always be on you. CALL US at (951)278-2207 24/7 WHAT IS FORECLOSURE? What is foreclosure, anyway? Let’s begin by taking a step back and describing what foreclosure is and what it’s all about. The mortgage or deed of trust document signed by a borrower during a purchase or refinance of a home gives the lender the right to sell the property if the borrower fails to live up to the terms of the agreement. Basically, foreclosure is the legal process a lender can use to enforce the provisions of that mortgage. As you may have noticed above, the terms mortgage and deed of trust appear here. Some states use a deed of trust instead of a mortgage. Though they are both legal instruments that spell out the rights and obligations of both lender and borrower, their terms of enforcement are handled differently. This book uses the term mortgage even when deed of trust would be more accurate. For the purposes of the discussions here, the two terms are interchangeable. TWO TYPES OF FORECLOSURE There are two common types of foreclosures: Judicial and Non-judicial. For all practical purposes, they amount to the same thing. The differences primarily concern with how the lender ultimately gets to the foreclosure auction. JUDICIAL FORECLOSURE In a judicial foreclosure, the lender must actually sue the borrower and get permission from the courts to foreclose. As you might imagine, this process is slow and expensive. In some states a judicial foreclosure can take a year or more. To begin the process, most lenders will wait until the loan is two or three months behind. Then, because the process is so lengthy and expensive, they will usually attempt to contact the borrower and offer an alternative to foreclosure. This is typically a payment plan of some kind, also known as a forbearance plan, which will be discussed later. If the lender is unable to work out something with the borrower, they will then file what’s called a lis pendens, a fancy legal term meaning that they are starting a lawsuit. Usually within 30 days of this filing, all parties with an interest in the property (owners, other lenders, lien holders, etc.) receive notice of the foreclosure action from the court. This gives anyone with a potential financial interest in the property a chance to respond or object to the foreclosure. The notice will contain a deadline, after which no answer or objection will be permitted. Anyone who does not answer is assumed to accept the foreclosure. The actual process is different in all states, but generally the lawsuit proceeds and the lender usually (but not always) prevails. The court grants permission to the lender to sell the property. Realize that the timeline of the process differs from state to state. This section exists simply to offer an overview and general understanding of the process, and not to completely describe a complicated legal procedure. The remainder of the process is very similar between judicial and nonjudicial foreclosures. NON JUDICIAL FORECLOSURE Non-judicial foreclosure gives the lender the right to foreclose without using the court system. That means it’s a much quicker and less expensive process than a judicial procedure, so lenders don’t typically wait as long before starting. Some lenders start to foreclose when a loan is only two months behind! In states that practice Non-Judicial Foreclosure, the process often begins with a 30-day demand for payment letter to the borrower. The lender is required to give the borrower this chance to bring their loan current before the foreclosure action can officially begin. The next step is for the lender to record a Notice of Default in the County Land Records Office (this may also be known as the County Recorder’s Office or the County Registry of Deeds in some states). This provides notice to the public and any potential lenders or buyers that a foreclosure action is about to take place. As a Notice of Default would cloud the title, it would be very difficult to refinance or sell the property. Not all non-judicial states require a Notice of Default. Some of them skip this step and go straight into the Public Notice of Sale. As was mentioned earlier, a non-judicial process is much swifter than a judicial process, owing to the fact that there won’t be a trial. In fact, some of them can be completed in less than four weeks! STAGES OF FORECLOSURE PUBLIC NOTICE OF SALE The next step is the Public Notice of Sale. Most states require that an official Public Notice be published once a week for three or four consecutive weeks in a newspaper of general circulation in the county where the property is located. The Notice of Sale specifies the name of the lender, borrower, address of the property, usually its legal description, the location and time of the sale, terms of the sale, and any required legal language explaining the rights of the borrowers and bidders. It’s at this point when most of the vultures get involved. You can sometimes spot them sitting in the corner of a local fast food joint, scanning the public notices section of the newspaper, writing furiously on a legal pad. AUCTION If the borrower fails to cancel the foreclosure, the attorney or auctioneer handling the file will conduct the auction. In almost every state, the auction is held at the county courthouse, though some states allow the auction to be held at the attorney’s office or other publicly-accessible place. At the appointed place and time, the attorney or auctioneer handling the sale will request that all interested bidders register and show proof of funds. Each bidder is required to bring a deposit to the auction, usually in certified funds (cash, bank check, money order, etc.). The amount of the deposit will vary from location to location, and sometimes even from auction to auction, but is often a few thousand dollars. Once all bidders have registered, the auction begins. The auctioneer reads the legal notice and announces the terms of the sale. Then the bidding begins. Usually the bidding will start ridiculously low, but then quickly build to a more reasonable number. It’s very rare, however, that a property is bid up to its real market value. In most auctions, the lender will have set a reserve price, below which they can refuse to sell the property. If the high bid doesn’t exceed this reserve price, the lender can reject the bids, and then the lender becomes the new owner. Assuming the bidding goes higher than the lender’s reserve price, the property will be sold to the highest bidder. This bidder will then be required to surrender his deposit and sign a sales contract. The unsuccessful bidders get their deposits back. At this point, the auction is over and the successful bidder will have some period of time (anywhere from 1 – 60 days) to complete the sale. Foreclosure sales have no financing or inspection contingencies, and all sales are as-is, where-is. Should the high bidder fail to complete the purchase, he usually loses his deposit. The lender will then either offer the property to the backup bidders, or hold the auction again. SPECIAL FORECLOSURE SITUATIONS REDEMPTION Some states have a redemption period, either immediately before or immediately after the foreclosure auction. This is a period of time during which the borrower can bring the loan current, paying all outstanding balances and legal fees, and thus nullifying the foreclosure. The length of the redemption period depends on the state. In some states, such as Minnesota, the redemption period begins immediately after the foreclosure auction. During this time, the borrower or any junior lien holder may redeem the foreclosure by paying all costs associated with the foreclosure and by bringing the foreclosing loan current. In states like Maine, the redemption period is the 90-days prior to the auction. The borrower can simply reinstate the loan during this time and stop the foreclosure entirely. Many states are non-redemption, meaning that the sale cannot be overturned after it has been held. In fact, in most non-redemption states, a bankruptcy filed just 60 seconds after the high bid has been recorded is too late to stop the foreclosure. JUNIOR LIENS What happens if the high bid is high enough to cover the foreclosing mortgage, but not high enough to cover any other outstanding loans and liens? In that situation, the junior lien holders take what’s left, in order of their priority.
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