Home foreclosure is an unfortunate event for homeowners across the United States. Borrowers are unable to keep up with mortgage payments and are losing their homes at alarming rates. Homeowners fall behind on payments for various reasons. Loss of a job, divorce, death in the family, and simply by over extending their credit are a few of the financial circumstances causing home foreclosure.
When facing home foreclosure, contact and communication with lenders is crucial. Without communication and timely payments, mortgage holders have no other choice than to reclaim the property through home foreclosure. Communication alone will not save borrowers from home foreclosure. However, it can help in obtaining alternative solutions.
Home foreclosure is the legal process in which lenders regain money that is owed to them. This occurs when lending banks repossess property and sell it to repay mortgage notes. When homeowners mortgage payments become 30-days past due a letter is sent to the borrower. This phase of home foreclosure is called the pre-foreclosure process.
When the next mortgage payment becomes past due, the lending bank sends another letter to the homeowner. If borrowers do not make contact, note holders will send a demand for payment in full. Once borrowers receive the second letter, they are legally required to pay the total amount due on the mortgage note, accrued interest, late charges, and any other fees associated with the loan.
Once borrowers receive the demand for payment in full letter, they have 30-days to respond. If they ignore the letter, lenders will send Intent to Foreclose letter through certified mail or by Sheriff and proceed with home foreclosure through the court system. A legal notice called Notice of Default (NOD) is published in local newspapers.
Homeowners can still stop home foreclosure at this point. Unfortunately, most do not have financial means to keep the home. Home foreclosure of the property continues and the property is placed for sale through a foreclosure auction. If the auction does not produce a bid on the property, it reverts to the bank and becomes bank owned or real estate owned (REO) property.
Real estate investors have several chances to purchase investment properties throughout pre-foreclosure and home foreclosure processes. Properties can be purchased through foreclosure auctions or directly from lending institutions.
Home foreclosures properties can sometimes be purchased through short sales before the property is auctioned. Before home foreclosure auctions take place, homeowners have the option to work with bank loss mitigators to obtain a short sale. After properties revert to bank owned, investors work directly with the bank.