What is the Difference Between a Foreclosure Sale and an REO?

Due to the continuing economic depression, more and more people are losing their homes. The major reason for this is mortgage payments delinquency. Homeowners who have suddenly found themselves out of work or undergoing some financial difficulties are the ones who are experiencing this crisis. This leads to their properties being subjected to a foreclosure and later on, to a Real Estate Owned Sale. You might ask, what is the difference between a foreclosure and Real Estate Owned (REO) sale?

Here are the differences between a Foreclosure and an REO:

1. A foreclosure is a home that is not yet owned by the bank. Most homeowners attempt to sell their homes through a short sale, selling less than owed and seeking forgiveness of unpaid debt from the bank, while in an REO, the bank already owns the property and is motivated to sell it as soon as possible.

2. Homes sold through foreclosure are those that are owned by delinquent homeowners. The holder of the liens of the home has required the assistance of the court to repossess the home in order to terminate the borrower’s right to redeem. An REO is a home or property repossessed by the bank or a lender after an unsuccessful auction. These properties could be free from liens upon successful negotiations with the bank and other lien holders.

3. Foreclosed home sale is done through bidding in auction. The officer of the court or the sheriff initiates the process of bidding. The price initially starts to an amount equal to the borrower’s outstanding loan but does not exceed the property’s market value. Real estate owned properties are directly sold by the bank. They are expensive compared to a foreclosure since lenders are willing to take all opportunity for them to regain their losses.

4. When it comes to the eviction process, in a foreclosure, the sheriff performs the eviction while in a real estate owned property sale, the bank initiates the eviction which involves an eviction coordinator.

5. Buyers of a foreclosed property may have several competitions in bidding. The property’s deed is given to the bidder with the highest bid price. Homebuyers in an REO may negotiate the price with the bank or the mortgage lender. They are also assured that the home is free of all lines. Plus, buyers can freely move-in anytime after sale is made since the home will be vacant by the time of the sale.

The cost of the property for both sales are fairly low than in a normal buying process. An REO may have a smoother buying process compared to that of a foreclosure.

If you are wishing to buy a home, it is vital to remember that the main thing that differentiates an foreclosure from an REO, is the responsibility for you as a potential homeowner. Buying real estate owned properties you are assured that the property is clear and free. When a home goes back to the bank or the lender after it remained unsold in an auction, the lender or the bank will have to shoulder all the debts, tax liens and other fees and payments connected with the said property. The best possible way for the bank is to sell it at foreclosure since in a foreclosure, the buyer gets the property as it is, without renovations needed and takes on the responsibility of all unpaid dues and taxes on the property.

A foreclosure property may have several risks involved. It is better to leave it to professional real estaet investors who know a great deal about foreclosure homes and the process involved.

Foreclosure Or Pre Foreclosure Sale? That Is The Question

What Is A Pre Foreclosure And What Are The Options

Are you presently a home-owner who missed over 3 payments on your mortgage and finding yourself in pre foreclosure situation? If so, be aware that although foreclosure process will take place much later, it does not necessarily suggest that you should be sitting and waiting to reach that point. You should know that there are a number of different options, that you might be able to exercise. One of those options starts throughout an early pre foreclosure stages and is also referred to as a pre foreclosure sale.

In regards to what a pre closure sale is, it is whenever the residence is sold before foreclosure. Quite often, it really is immediately before foreclosures auction for the particular property is about to take place.

So “why would some homeowners wait for so long?” you may ask. The answer is very simple. These homeowners are seeking out the ways to “cure” the loan or simply waiting for a reprieve from their respective lenders, sometime applying for a loan modification and waiting for the lender to get it approved.

Unfortunately, a lot of people lost their respective jobs lately, due to the poor situation on the job market, which contributed to their less than attractive financial and credit score standing in the lender’s eyes and therefore unlikely hood of receiving that mitigation. And that is the major reason, in our opinion, all homeowners should familiarize themselves with pre foreclosure sales.

Steps To Help Yourself With A Pre Foreclosure Sale

As previously stated, not every homeowner will be lucky enough to receive an assistance from his/her lender.

If you happen to find yourself in this unfortunate position, a pre foreclosure sale might be the only way to maintain your credit score in decent standing. Foreclosing on the property can negatively impact your credit for years to come. Consistent with credit, some attorneys will advise their clients to file for bankruptcy in order to stop foreclosure and hang on to their home. This might be a rather risky proposition.

In the event you made the decision to sell your own home, it’s a wise to make arrangements together with your lender. A financial institution that realizes you’re actively attempting to sell your home is almost certainly going to provide you with a reasonable time to allow this sale to occur. That sale could also be handled by your local Realtor. If you are upset or feeling really emotional relating to the potential loss of your home, you will find a help of a caring Realtor is mandatory. The reason for this is simply because often it is extremely tough dealing with prospective buyers who have no feelings and no regard for you and your troubles.

As I previously stated, certain buyers curious about pre foreclosure sales aren’t always careful in the words they choose. You might need a help of a Realtor to take care of people that are looking down on you. Yes, usually those people are wrong in their opinions, but you must handle things calmly and that is where you might find the help of a concerned Realtor priceless. Unfortunately, there are numerous misconceptions that surround those facing foreclosure, vast majority of which are not true. Remember to always keep your mind held high. As painful as it might be to be dealing with a “jerk”, that is trying to buy your home your ultimate goal is to avoid foreclosure and keep your decent credit rating.

If you decide to use the help and of a competent and caring Realtor in assisting you with the sale of your home, you could, quite possibly, clear out more money. Realtor might be able to make a correct assessment of the Market value, help you with staging your home and therefore netting more money on your sale. Although you should not expect much of a surplus, after paying off your mortgage as well as the Realtor commission, but this may be sufficient enough to make your new living arrangements. Purchasing another house is not a likely option at this point of your life but you might be able to clear enough money for a security deposit and first and last months rent.

Final Thoughts On A Pre Foreclosure Sale

Perhaps, the biggest downside to selling your residence, via a pre foreclosure sale, is the fact of actually losing “your home”. The fact is, this is the main reason why many home owners delay until last minute to go ahead with the sale of their home. It is a decision that many homeowners are uncertain about and uncomfortable with. Please be aware that with the exception you could get your mortgage back to good standing or as they say “cure” it, you might lose your residence regardless. A pre foreclosure sale at the very least gives you the ability to retain a decent credit score, as the greater part of your mortgage will be paid off and let’s hope in its entirety.

If you would like to get a more detailed consultation regarding a pre foreclosure sale or would like a help of a competent and caring Realtor, we will be privileged to serve.

Trustee Sale Criers Have Multiple Responsibilities

It isn’t very often that I get to chat with the “criers” who auction properties to the public at the trustees’ sales in non-judicial foreclosures, but I have known Mike, a crier at one of the northern California county sales, for a number of years. Frankly, his comments pointed to something that I hadn’t questioned for a long time.

I have “accused” these auctioneers of being highly focused and limited participants who cried the scheduled sales, walked away unaffected at the completion of their limited daily tasks, and lived a more or less sheltered life away from the hustle and bustle the rest of us call living. I implied that they saw little of the raw life that we the bidders at the trustee’s sale regularly became immersed in—actual exposure to the foreclosing properties. I was wrong.

Mike took exception to my description of the responsibilities of these sheltered beings and told me that “criers” was not an apt description of what they did. Yes, they did winnow through today’s schedule of sales and go through the bid process with those who qualify. They have other important tasks too. For instance, they must organize all the scheduled sales for presentation at the courthouse steps at the scheduled times in a reasonable and understandable way when given the cue by the trustees that the final steps, the trustees’ sales, should now be taken—or postponed, or cancelled.

These auctioneers also tag the properties scheduled to be sold at the trustees’ sales. They have the responsibility to formally notify occupants (owners and non-owners) who occupy the property by posting a notice (usually on the front door of the residential properties). These notices called the Notices of Trustees’ Sales let the occupants know that legal action will be taken against the owners of the properties unless the foreclosing beneficiaries (lenders) are paid the principal, interest, and charges shown in the Notices by explicit future dates. If such payments are not legally received, the beneficiaries will direct the trustees identified in the foreclosing deeds of trust to sell the properties at the described locations at the scheduled times. The trustees normally appoint local representatives whom we call criers to physically handle the actual sale.

The point here is that the auctioneers have a broader set of responsibilities in the final steps of the foreclosures than I perceived. They also see the properties that they offer to the public and, therefore, have more than a limited perception of the physical properties which include prior knowledge of the property locations and, in a very limited sense, the appearance of the properties.

This rather extensive process normally includes taking photos of the properties after the notices are posted in visible places. Although California Civil Code does not specifically required such validation, photographs are taken by the auctioneers and may be offered to demonstrate completion of appropriate actions by the trustees to properly notify the offending trustors that legal action will now be taken. The trustors then know that non-response can cause catastrophic property losses.

Learn How to Avoid Foreclosure by Understanding Short Sale Process!

Introduction:

Quick Sale is a kind of real estate, where you can owe more than the estimation of your property. Lending institutes, for example, huge banks or other money related establishments will permit you to run with a short sale, so you can abstain from experiencing foreclosure issues and undoing in your credit rating over the long haul.

You can undoubtedly get rid of issues on your credit rating on the off chance that you go through this short sale process. This article will help you on how you can apply for a short sale, with the goal that you can keep away from foreclosure issues.

Contact Local Bank or Lending Institution:

As a rule, the bank goes about as a loan specialist for this situation, so it is their obligation to help you in comprehending your land issue. Attempt to show at least a bit of kindness with the Loss Mitigation Department and unveil your own trouble to them and legitimize that you truly need to go through short sale.

Gather Your Requirements:

Do your level best to gather all the required data in short selling your property. They may request that you deliver a hardship letter and before you move out of the workplace, get their names and contact subtle elements also.

Foreclosure Specialists:

When you have found the right short sale specialist, request that they do market analysis and take some photographs of the property. You can likewise request assistance from your short sale specialist on the most proficient method to oversee or get ready hardship letter since, they know more than you on what to compose and to abstain from concerning it.

Compose Hardship Letter:

Set up a hardship letter with reasons on why you can’t make installments for your home loan any longer. Additionally, incorporate the bank statement copy from most recent three months, a confirmation letter on the off chance that you have ended from your employment. Additionally, incorporate business market analysis and photographs of the property taken by your specialist. At that point, send the hardship letter and other documents to the Loss Mitigation Department. Usually this process may take a while, so you should be patient.

Extra Necessities:

These days, the loss migration office would ask extra requirements from you before they begin preparing your application structure. Better consult with the Foreclosure specialists for knowing extra necessities required in the short sale process.

Sit tight For a While:

When you got the offer, your loan specialist may agree or disagree to carry out the short sale process. Generally, the final say on short sale will originate from the mouth of your loan specialist, so it is essential to be good your bank amid and after the exchange.

Short Sales Explained: 6 Major Differences Between a Short Sale and Foreclosure

A Short Sale is when the mortgage lender agrees to settle with a discounted payoff that is less than the balance owed on the loan to consummate a sale of the property and stop foreclosure. By taking this avenue, it will help the lender receive more of the loan balance and less hefty fees compared to a foreclosure process. The homeowner will also maintain a better level of credit. Certain criteria must be met to qualify for a short sale. Provision of economic hardship & evidence of zero equity in the property must be submitted by the homeowner to the mortgage lender. It is an extremely complex transaction, so be sure to select an experienced professional who is very knowledgeable in this field.

6 Differences Between a Short Sale and a Foreclosure

1. Credit Score

A short sale lowers your credit as little as 50 points for 12 to 18 months. While Foreclosure lowers it at a minimum of 250 points for three years or longer. Without the ability to repair your credit after a foreclosure, it may affect your ability to be gainfully employed or find housing.

2. Credit History

A short sale is reported paid in full and does not show on a credit report. A foreclosure will be on your credit history for 10 years or more as public records.

3. Waiting period to buy another home

If you can stop your foreclosure, you can get loans with reasonable interest rates within two years. With a foreclosure, you may wait 24-72 months.

4. Cost & Length of Time

Short sales are typically faster and less costly than foreclosure and it saves you a lot of embarrassment and shame that is associated with foreclosure. Foreclosure puts you at risk of being sued by your lender, dragging out this painful experience longer. Foreclosure also causes the homes of your neighbors to go down in value.

5. Future loans

With most lenders, a short sale does not need to be declared on a standard loan application, while a foreclosure will, therefore, skyrocketing your interest rates. Know that you may experience this reminder every time you need a loan for the rest of your life.

6. Sale of property

A short sale is a consent agreement between seller and lender while a foreclosure is a forced action upon the seller by the lender.

Many unfortunate homeowners find themselves caught up in a dilemma due to a poor local and nationwide real estate market or financial hardship. Homeowners are unable to refinance or modify their mortgage loan. Restore your dignity and peace of mind. Enjoy not only forgiveness, but some banks offer cash or other compensation to the homeowners who cooperate in this short sale process. Real estate firms that specialize in these types of transactions have the necessary experience and solution to eliminate your mortgage debt problems and provide you with the free lifestyle you long for. Time is of the essence so call an agency right away to have your questions answered. Make the best decision of your life and stop your foreclosure proceedings.