January 30, 2014

Preforeclosure homes available? Read on!

There have recently been a number of inquiries about ‘pre-foreclosures’ that may be available to purchase. Please read below the definition of a pre-foreclosure:

The status of a property which is in the early stages of being repossessed due to the property owner’s inability to pay an outstanding mortgage obligation is called a pre-foreclosure.

Reaching pre-foreclosure status begins when the lender files a default notice on the property, which informs the property owner that the lender will proceed with pursuing legal action if the debt is not taken care of. At this point, the property owner has the opportunity to pay off the outstanding debt or sell the property before it is foreclosed.

What does this mean?

Property owners who are in the pre-foreclosure stage may enter into a short sale in order to pay off outstanding debts and get agreement from the lienholder to accept partial payment if the debt exceeds the value of the property. Because the property owner is looking to avoid being foreclosed upon, an interested party may be able to purchase the property for at a price that is more affordable than one that is owned by the lender.

There are two important stages of pre-foreclosure. First, the homeowner will get a Notice of Default (NOD). In normal terms, this notice is generally produced after the mortgagee is 3 months late on their monthly payments. However, during the height of the property decline from 2007 through 2011, sometimes the lenders did not generate this notice for many months. The second stage of pre-foreclosure is the Notice of Trustee’s Sale (NTS). This notice generally comes 3 months after the NOD and the sale is normally scheduled for 3 weeks after the posting of the NTS.

Normally, if a homeowner feels that they cannot keep up the payments, they will contact a Realtor to enter into a short sale contract. These homes are on the Multiple Listing Service and are available to purchase by anyone who qualifies. In some occasions, the property owner does not list their home, probably because they plan to 1) catch up on their payments 2) enter into a loan modification or 3) walk away.

Only in the case of the third option will a Realtor be able to attempt to get the property on market. If you have any questions, please contact us at 925-308-7045

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