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If you're in financial trouble, call an attorney, your local Legal Aid Office, or 888.995.HOPE  |
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Reasons for Foreclosure - Job loss
- Reduced Income
- Relocation
- Business Failure
- Payment increase
- Mortgage adjustment
- Separation
- Divorce
- Severe Illness
- Disability
- Death of Spouse
- Death of Family Member
- High Medical Bills
- Natural Disaster
- Mortgage Fraud
- Predatory Lending
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Foreclosure Defined Ask consumers what they think of when they hear the term foreclosure, they respond in a number of ways: - Real Estate hungry banks stripping propertiesfrom owners
- Property owners' belongings moved onto the street
- Gutted or abandoned properties
- Homes being sold on the courthouse steps
Buyer clients may express interest in purchasing a "foreclosure" with the hopes of "scoring" a property for cents on the dollar. The Realities: - Few lending institutions want homes on their balance sheets
- Foreclosure is not a type of property
- Foreclosure is a legal process by which a defaulted borrower is deprived of his or her interest in the mortgaged property.
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For decades, homeownership has benefited families and communities all over America with great stability, economic prosperity, safer neighborhoods, better educational opportunities, and even improved health. The recent increase in foreclosures threatens previous gains made in homeownership, as millions of families who had hoped for sustainable homeownership are now struggling to pay their mortgages. The financial profile of borrowers who experience foreclosure is changing constantly. While foreclosure rates are historically higher for subprime mortgages than for traditional mortgage products, rates of mortgage default are increasing among the most credit-worthy individuals: prime borrowers. The percentage of prime loans that were seriously delinquent - loans 90 days or more past due or in the process of foreclosure - increased more than threefold from the end of 2006 to the end of 2008. Foreclosure – Wave or Tsunami?
Foreclosures are often expressed in popular media as occurring in “waves”, e.g., the foreclosure wave due to the reset of option adjustable-rate mortgage (ARM) interest rates, the foreclosure wave due to increases in unemployment. While it may be adequate to describe the number of foreclosures as waves, the individuals who have experienced foreclosure first – hand might describe a foreclosure more in terms of a tsunami. In some situations, owners may be forcibly evicted from their homes. Abandoned properties may be boarded up, gutted, or vandalized. Foreclosure has a lasting ripple effect on neighboring home owners by applying downward pressure on property values. For a review of the consequences of foreclosure, see the following figure. |
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| The Effects of Foreclosure on | Distressed Homeowners: | Neigboring Homeowners | Surrounding Community: | - Loss of Home
- Loss of Equity
- Damage to Credit
- Lower Credit Score by 200 points or more
- Remains on Credit History for seven years
| - Declining Home Values
- Loss of Equity
- Increased possibility for Vandalism and Theft
| - Declining Home Values
- Reduced Taxpayer Base
- Increased possibility for Vandalism and Theft
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Online Reports
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To enhance your buying and selling experience, it’s our job as real estate professionals to provide you with as much valuable information as possible. It is essential that the buyer or seller be aware of all aspects of the real estate market before making a major decision. Whether it be through newsletters, checklists or news articles, we are here to make this process stress-free and rewarding. Please access our free reports today!
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| A Look at Terrminology and Process There are many related words and acronyms – e.g., pre-foreclosure, NOD, and REO - that are sometimes used incorrectly. What do these mean exactly and how do they relate to the process of foreclosure? Let's review: Pre-Foreclosure: The period beginning with initial mortgage default up to when the distressed property is sold. The length of what is considered pre-foreclosure varies, depending on state laws. NOD: Short for notice of default (NOD), this is an official notice from the lender that the borrower has defaulted on the mortgage. The NOD formally begins the foreclosure process. The NOD also outlines the reinstatement period. Reinstatement Period: The time stipulated in the NOD in which the borrower may reinstate the loan – making required payments and bringing one's account into good standing. Short sale: A situation in which the seller owes more money on the loan than the sale of the property will likely produce on the market and is unable or unwilling to bring money to closing. The seller may or may not be in pre-foreclosure. Notice of Sale: If, after receiving the notice of default, the borrower does not or is unable to reinstate the loan, a notice of sale is recorded. The notice of sale explains when and where the foreclosure sale will be held. Foreclosure Sale: Also known as the sheriff's auction, sheriff's sale, or trustee's sale, this is when the property is auctioned for sale to the highest bidder. Redemption Period: The time that gives a distressed owner the right to redeem real estate after the foreclosure sale. Redemption typically requires that the owner pay the sales price, interest, and other costs. Note: not all states provide for redemption periods. REO: Acronym for Real Estate Owned. REO is the status of the property when the foreclosure sale is not successful and when ownership of the property is transferred involuntarily to the lender.
While the specific steps of foreclosure proceedings vary by state, loan instrument used, as well as by the lender, it may be helpful to visualize the foreclosure process. |
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The Process of Foreclosure | | The Foreclosure Stages | Borrower Misses Payment ⇒ Lender attempts borrower (usually 3 times) ⇒ Lender sends Notice of Default(NOD), officially starting the foreclosure process ⇒ If borrower does not reinstate loan within time line, notice of sale is recorded and published ⇒ Foreclosure sale (auction, trustee's sale, sheriff's sale) is conducted as published ⇒ If unsold to another party, ownership of property is involuntarily transferred to lender. The property is now real estate owned (REO) | | Pre-Foreclosure
Foreclosure Auction
REO |
For most owners, mortgage default and foreclosure proceedings represent uncharted, nerve-wracking territory. Depending on state laws as well as the loan instrument used (trust deed vs. mortgage), foreclosure proceedings can occur quickly, as in Georgia where the process period is a little more than 30 days. In other states, like New York, foreclosure proceedings can take more than 400 days. |
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