| If you are in the midst of a home foreclosure, | | | | put borrowers on notice that they are in danger |
| then it's good to know the home foreclosure | | | | of facing foreclosure actions. This filing also sets |
| process. If you are a real estate investor looking | | | | off a reinstatement period that will usually last |
| for some good deals for real estate investing, | | | | around five days before the property is officially |
| then you'll also want to understand the home | | | | listed or auctioned off. |
| foreclosure process. | | | | When the Mortgage Defaults |
| The home foreclosure process is complex, but | | | | Once a home owner is started down this spiral, |
| not really that difficult. Although it varies from | | | | they'll usually not be in a position to correct the |
| state to state, there is a fairly standard process | | | | mortgage default within 90 days. If you are doing |
| used by counties for a home foreclosure. | | | | real estate investing, then you may want to get |
| A home will enter the home foreclosure process | | | | to the homeowner before this happens. This is |
| when the property owner fails to pay the | | | | called "pre-foreclosure" investing. |
| principle, interest, and/or real estate taxes for a | | | | At this point, the home sale date is established. |
| period of time - usually about 6 months. Many | | | | The homeowners will receive a Notice of Sale. |
| owners will skip their property tax payments | | | | The Notice of Sale will get posted on the house |
| while maintaining the principle and interest | | | | or property and a copy is recorded at the Office |
| payments on their home. | | | | of the County Recorder. Most counties have a |
| Most foreclosure procedures tend to result in | | | | section of the local newspaper in which they lost |
| seizure and sale of the property. | | | | these sales. If not, you can easily get this |
| Why Home Foreclosures Happen | | | | information from your county office or web site. |
| The downward spiral of home foreclosures is hard | | | | Most of these foreclosure procedure trustee sales |
| to stop once it begins. You get behind on | | | | take place at the county courthouse. The location |
| payments, which makes it difficult to catch up. | | | | and time of the sale are usually specified at this |
| What happened recently was that many | | | | time. Most of these foreclosure properties are |
| borrowers had loans at "sub-prime" rates. That is, | | | | awarded to the highest bidder at a local auction. |
| the mortgage rates were less than the prime | | | | Most winning bidders are required to pay in cash, |
| rate. After a period of 3 to 5 years, the interest | | | | with an initial deposit due upfront, and the rest |
| rate was to go up to "Prime-plus". If, for example, | | | | due within 24 hours of the initial sale. |
| the mortgage rate was set at 2.5% for 3 years, | | | | When the auction takes place, the opening bid is |
| it would go up to about 7-8% after the initial | | | | set by a representative from the foreclosure |
| period, in many cases doubling the payment. | | | | lending company. You'll see that the opening bid |
| Many people couldn't afford the new payment, so | | | | equals the amount owed to the lending company |
| they started down the home foreclosure spiral. | | | | - the outstanding mortgage balance, including any |
| The process of foreclosure begins the moment | | | | built-up interest and extra fees associated with |
| that a mortgage loan payment is 16 days late. | | | | Trustee Sales. |
| Once this cusp has been reached, full-blown | | | | Home foreclosure is a heart-wrenching process. If |
| foreclosure procedure is usually not far behind. At | | | | you are a real estate investor, you've got to |
| this point, the mortgage service provider may | | | | think of this as a business transaction. It's easy to |
| attempt to get in touch with the delinquent | | | | get emotionally involved, although you are often in |
| homeowner in order to create some kind of | | | | a position to help the person going through the |
| workable repayment schedule. | | | | home foreclosure process by helping them get |
| The homeowner continues to miss payments. | | | | out with a little cash and no black marks on their |
| Home foreclosure proceedings may start after | | | | credit. |
| the homeowner has missed from three to six | | | | Do yourself a favor if you are in the home |
| months of loan payments. From there, the | | | | foreclosure process. Get some help. This is not a |
| mortgage lender may order a trustee to draft | | | | time to be proud, or try to keep it a secret. Help |
| and record a Notice of Default. | | | | is available from many sources, so find someone |
| The Notice of Default is known as a NOD at the | | | | who can help bail you out. |
| Office of the County Recorder. The NOD aims to | | | | |