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Foreclosure
The process by which the holder of a mortgage sells a property after the debtor defaults on their loan for it
2,433 Questions
What are the benefits of buying foreclosed homes?
Financing will differ if you are purchasing the property as an investment or as a primary residence. Many of these properties will also have repairs that will need to be made in order to pass inspection and bank appraisal, so you will need to have a clause in your purchase agreement covering this eventuality. For instance, if it is a HUD house, you may find yourself in a position where you are unable to get a loan on the house if certain repairs are not done and HUD refuses to do them, let you pay for them, or do them yourself. It can be a sticky wicket.
It also depends on whether you are buying only as an investment or if you intend to occupy the house. For example you may not want to live in a neighborhood where most of the homes are rentals, but this may not matter if it is an investment.
As with any major purchase you need to do your homework because many of the laws that protect you in a conventional real estate transaction may not apply to a foreclosed property. Further many times if the person who owned the home was foreclosed on because of not being able to make their mortgage payments, there may be other debts such as property taxes that will need to be considered.
Remember that these people are "losing their home," and you may be the target of their disappointment. On your final walkthrough (or do so before closing), take pictures of the home, particularly light fixtures, fans and appliances. Our sellers made off with many of the lighting fixtures and parts of the house and we had no recourse.
Finally, if you do buy a foreclosed house, make sure that you have some savings to apply to repairs and replacements. These houses are a great deal pricewise, but there will be some sweat equity involved for the bargain.
AnswerAt first glance, it looks like a tempting deal: you get a perfectly good home for practically half the price for sale, or even less. But this could be a catch, because every city has unscrupulous sellers, buyers, agents and lenders. So, take note of the following points:- Know What You're Buying
- Do A Title Search
- Get Insurance
- Check Into The Equity
- Work With Your Agent
Do you have to pay cash to buy a foreclosed home?
Not all cash. You have to pay some cash to buy any home (the down payment). Therefore you buy it the same way you would buy any house.
Why wouldn't everyone want to buy a home that has been foreclosed if they are cheaper?
Be prepared to do your homework with regards to the condition and pricing of the property. There may be reasons other than financial involved in the foreclosure.
Something many people don't ever consider is that foreclosures are often in serious disrepair.
I've seen homes where the residences just demolished the place - holes in walls, ripped up carpet and vinyl flooring, smashed porcelain in the bathrooms, broken windows. Don't get me wrong this is not too common. But every now and then some hothead decides that if he has to give up his house, he'll show the bank by 'getting even' with them.
More often you'll find neglect simply because the owners couldn't afford house payments so where were they going to get funds for basic repairs?
However...there are real gems out there if you are patient and persistent. A 200,000 home going for almost half it's appraised value...we missed out on one like this because 15 years ago it was more than we could afford even at that price. Gorgeous house, huge, in an affluent neighborhood. The owner spent so much on mortgage payments this huge home had almost no furnishings! Ahh, if only I'd known then...I'd have begged and borrowed the downpayment from friends and family. Just think of the sheer investment potential.
Then there are the government sales, and HUD homes. There used to be clauses that stipulated you had to reside in the home for a specified lenghth of time. On the up side, your financing often included the funds for improvements.
IMO, the benefits far outweigh the risks. Many people have no idea what it would take to get started investing in foreclosures. A lot don't have the time or the ability to make the improvements that will make a dump liveable or that can turn a nice house into a hefty profit for you.
My advice to anyone thinking about getting into a foreclosure: do your homework. Learn everything you can on the topic. Don't skimp on appraisers, inspectors, etc, or you may really regret it. Be careful and use common sense.
If you are not a 'handy' person, your cheap house may end up costing you more than you thought. On the other hand, if you have the time and skills... Our first house, though it wasn't a foreclosure, illustrates my point nicely. We put nothing down, purchased a home at the mid to low end of our budget (about 5K under appraisal), owned it six months while living there and making what was really minimal improvements: paint, wallpaper, new water heater, some inexpensive landscaping. Six months later we sold it for 20K more than we paid for it!The third house we bought in for 2 or 3 years and increased the value 18K. Number 2 was not bought for investment purposes, but we didn't lose money. And the one we are in now...been here 7 years. Last time we refinanced the appraisal value was 55K more than what we paid for it! But I think we'll stay here a while, I'm content with the house, neighborhood, schools.
Anyway, to answer your question: "Why doesn't everyone do it?" Not everyone knows how. Not everyone can. It's as simple as that.
At a foreclosure sale, the mortgage company makes the first bid and they bid what is owed on the loan. So to purchase a property at foreclosure sale you would have to bid over that amount.
As someone who worked for a mortgage company for many, many years, I can tell you that 95% of the time (and maybe more than that) after we resold the property we ended up with a loss (and usually a substantial one) because we were unable to sell the property for enough to cover the loan balance.
As a general rule, if the property is worth enough to payoff the loan, the mortgagor will sell it themselves, rather than having a foreclosure on their credit record.
With that said, I'm sure you can find 'deals' out there on foreclosed homes, but you would have to really look and do your research.
I would first like to say i specialize in foreclosures so hopefully i will give you some usefull information here.
First common misconception foreclosure laws are vastly different from state to state. You can find you local foreclures laws by looking at your state statutes.
In ga for instance we have no right of redemption,once it's sold at the courthouse steps the only thing that survives is property taxes owed,the IRS does not have a senior position on you but if there is a IRS tax lien on it they have 120 days from the foreclosure sell to reimburse what you have paid and claim the property for themselves,if they do not respond by then it deletes there claim on the property.
Another misconception PLEASE,PLEASE do not go to these foreclosure websites and pay them money for lists. Often times these lists are a month or 2 behind and the properties have not foreclosed,or are under contract or have already sold so don't waste your time and money. Another misconception is you will get rich quick,the late night programs that say i bought a house 120k for 30k and made a killing please give me 200. Did the person buy a house for that price sure but that was 1 out of 50 deals he did not all of them were that way but he wants to get you excited so you will buy his program.
What are the disadvantages of buying a foreclosed property?
The only two disadvantages in buying a foreclosed property: #1. Tou have to put a mandatory 10% down. #2. The property may have some minor damages due to the prior owner being upset of being foreclosed upon.
How do you find homes that have been foreclosed?
Finding a foreclosed home can be done several ways. Contacting your local real estate agent is always the best place to start. Your real estate agent can help you find homes, contact the agencies selling foreclosed homes, refer you to agents of a specific region, and handle the paperwork that comes with purchasing a home. Whether you're an investor, or purchasing your own new home, real estate agents are very beneficial.
Also check your local newspaper, not only for individual foreclosed homes, but for auctions as well. Purchasing a home through auction, can in general, be much cheaper, and faster than simply going through a real estate agency.
I don't like to go on a wild gooes chase and you shouldn't either; so check out a great website that I use: Foreclosures.com
First of all while in a BK 13 the party cannot make any financial transactions w/o the permission of the BK trustee. Who I assure you would give a resounding NO! Secondly there is no lender that would enter into such an agreement, not even the predatory ones.
Does the cosigner need to be contacted when the owner stops making payments?
Under federal law, I don't believe the lender has any obligation to contact you as soon as the borrower misses a payment. You need to ask the lender to do it, and get this in writing.
YES, you can include it whether the payments are current or not.
How does a home equity line of credit work?
With a home equity line, you will be approved for a specific amount of credit, your credit limit, the maximum amount you may borrow at any one time under the plan. Many lenders set the limit on a home equity line by taking a percentage (say, 75 percent) of the home's appraised value and subtracting from that the balance owed on the existing mortgage.
In determining your actual limit, the lender will also consider your ability to repay, by looking at your income, debts, and other financial obligations as well as your credit history.
Many home equity plans set a fixed period during which you can borrow money, such as 10 years. At the end of this "draw period," you may be allowed to renew the line of credit. If your plan does not allow renewals, you will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period (the "repayment period"), for example, 10 years.
Once approved for a home equity line of credit, you will most likely be able to borrow up to your limit whenever you want. Typically, you will use special checks to draw on your line. Under some plans, borrowers can use a credit card or other means to draw on the line.
There may be limitations on how you use the line. Some plans may require you to borrow a minimum amount each time you draw on the line (for example, $300) and to keep a minimum amount outstanding. Some plans may also require that you take an initial advance when the line is set up.
In A Nutshell-- Example: You bought your home 11 years ago-- so far you have paid a total amount of $56,000 toward the contract loan amount given to you by your initial bank-- You now have $56,000 in Built-UP equity that you can borrow against-- from either the same bank that gave you the initial loan to purchase the home in the first place or from another different bank. You have an invested $56,000 in the home and the bank knows that you will not want to falter and take the chance on losing the home after you have already put soo much money into it. An so if you want to take out a loan from the same bank or a different bank they will most likely welcome you and issue you a Home Equity Line of Credit Loan as long as you Promise BY Contract that if they give you a loan against your built-up equity you will give up your investment portion of the home if you falter on the payments. If you do this with your initial bank the bank could give you an extended mortgage contract against your first mortgage contract making your payments slightly higher and adding more time for you to pay the amount owed-- if you do this using a second bank you will likely be be faced with a second mortgage.
I ACCEPT CONSTRUCTIVE CRITICIZM -- Please feel free to add to thisinformatin
Should you get a foreclosure loan?
== Foreclosure loans== Beware of this situation: You can't pay your mortgage and face foreclosure. A "lender" contacts you, offering help. First, the lender requires you deed the property to him, claiming this is a temporary safety measure to prevent foreclosure. Once the lender has the deed, he owns your property. He can borrow against it or sell it to someone else. The lender can treat you as a tenant, using the mortgage payments as rent. Once you default on the payments, the lender can evict you from your own home. More opinions from FAQ Farmers: * What most homeowners do not realize is that there are government and private programs available to resolve their situation - with no need to obtain a new loan - and no need to have excellent credit. These solutions often cost much less than obtaining a new loan.
Can you get an equity line of credit on an owner-carry home?
I presume owner carry homes are kind of apartments so you can get equity line of credit .
How long do you have to wait to refinance?
How long do you have to wait to refinance?? Ok this all depends on a couple of items. First did your loan have a prepayment penality??. If so I would recommend you wait until that period of time is over. Call you lender and ask. If you do not have a prepayment penality. Know that most loans have at least some closing costs. If your present loan rate is high for some reason and your financial sitution allows (Higher FICO) you can refi anytime. The rule of thumb is if you can get a lower rate at 2 points less that would be a good signal or if rates are rising and you have an ARM (adjustable rate mortgage) then perhaps, or another is your home has appreciated remarkably and you wish to draw on that money. Hope that helps.
What can you do to stop the sale of your property and how much time do you have?
who is selling it and why? Is it being foreclosed? If so... you can find another family member or something to buy the home, try and refinance it , or try to catch up on deliquent bills with the mortgagee. If it is in foreclosure you can file a chapter 13. It will stop the sale the very same day.
What closing costs should one expect if paying cash in full for a house?
Closing costs have become such a debated issue but in essence closing costs are really the same no matter what. It is unfortunate though that many people in the industry abuse it and sometimes mislead the client and that creates the misconception of closing costs. Then you have the no closing costs or no points loans when in essence you are getting the no cost loan by accepting a higher interest rate and over the life of the loan you'll probably pay the closing costs or points 4 times over.
Typical closing costs for a buyer are.
Termite Inspection (if required by the lending bank)
Appraisal Fee
Attorney Fee
Origination Points (1 point = 1% of the loan amount)
Title search
Title Insurance
Mortgage Tax (if applicable in your state)
PMI (on a conforming loan over 80% financing)
Banks Attorney
Homeowners insurance
Escrows (if creating an impound account for property taxes and insurance)
per diem interest (money on interest borrowed for the remained of the month. i.e you close on the 16th of the month, so you will need 14 days interest to the bank).
Those are the typical closing costs, title insurance is a buyers expense. Ofcourse it can be negotiated where the seller pays some or even all of the buyers closing costs and that's known as a sellers concession or seller assist but it must be noted in the sales contract, as well as in the loan and appraisal in some cases.
Mortgage tax can be as low as 0.32% in Florida or as high as 1.75% in NY. Some states have none, some states don't require a bank attorney at closing.
Your best bet is to contact a title company in your state and get a list of the state closing costs.
Usually I tell clients to estimate anywhere from 4-6% of the loan amount as their closing costs.
Where can you get a home equity line or second mortgage to pay off a foreclosure?
First try to work out a repayment or forbearance plan with the existing lender. If that doesn’t work, find a good mortgage broker who can shop lenders for you. There are various lenders that have loan programs for people in foreclosure. However, a lot will depend on how much is in arrears, the equity in the home, credit rating, ability to continue paying, etc. But oftentimes, it can be done.
Why do companies still take checks and not just cash debit or credit?
For the bottom dollar. People don't always carry cash or have credit cards. You want to increase sales? Make the purchase easier for the customer. With proper ID you at least have recourse if it does bounce. www.slygear.com Also because it costs you nothing to receive checks - there are fees associated with receiving credit cards and debit cards that can add up to a significant amount. For example: Certain floral (flower shops) support companies (like FTD) offer credit card processing for their customers - the benefit is that they can accept almost any credit card ... down side is that the fees, charges and hidden costs can run upwards of 6% of the total sale to the owner... that's on top of the absolutely deplorable monthly statements they send that probably could have been more concise if drawn up by a team of 2 year olds with large boxes of crayons.
Can the creditor attach or 'take' other property to satisfy deficiency?
James, don't know what state you are in But unless your state prohibits it, YES. The lien will "attach" to the property and when she gets ready to sell it, lien will have to be satisfied first.
NO.They can only go after what property was secured by the loan.
Arizona TITLE STATE: Yes SECURITY INTERESTS: Shown on title, title mailed to debtor, lien-holder record mailed to lien-holder. LICENSE REGISTRATION: The Arizona Department of Transportation, Motor Vehicle Division, 1801 W. Jefferson, Phoenix, Arizona 85007. Tel:(602)255-7011. RECOVERY REQUIREMENT: As per UCC, repossession allowed without committing a breach of the peace. DOCUMENTS REQUIRED FOR LIQUIDATION: Arizona Lien-holder record or out-of-state title, AZ MVD "Affidavit of Repossession/Bill of Sale" form and vehicle inspection if vehicle not previously registered in Arizona. PLATES: As of 01/01/02 - plates now belong to the registered owner of the vehicle. They remain with the debtor. ArizonaRevisedStatutes go to the link and check it out
Scott, CALL the lender ASAP. lender is ultimately responsible(legally) for returning personal property. Repo cos. are just their agents. Lender can tell repoman to give up the PP or lose business. Did that, called the lender and they called the repo guy. The lender told me it was up to me to keep calling the repo guy and set up an appointment. Repo guy said he would call me back, still has not done that. The lender is saying it is up to me to chase him down, he will not return a call. Said it was my property and if I really wanted it I would keep calling him until he set up an appointment for me. Scott, sorri I didnt check for a response from you. Most folks dont respond. This lender is not acting "normal". Have an attorney call them. That should stir the pot a bit. Email me if that doesnt get results. Do you know the name of the "alleged" repo company? Scott, Stop wasting your time with calls.Stop dealing with the repo moron most of these guys are scumbags and thieves(i think it is a prerequisite to be in the business). Send a letter to the lender and demand that THEY return your property!They are the ones who have stolen it.The repo chimp is an agent for the lender so in legal terms the lender has stolen your property.In your letter list the items and their value and inform the lender you are not paying any fees or signing any waviers to get your property back.Also inform them that they will be responsible for any costs you incur to recover your stolen property(legal fees,court fees,your time etc.)Do not wait for a response from the lender; go and sue the lender in small claims court.If the amount exceeds your state's small claim limit file anyway and then look for an attorney with some guts.Good Luck!!
How do you find out if someone elses vehicle has been repossessed?
"YOU" dont, the debtor does. call the lender.
What type of license do you need to start a repo business in Michigan?
contact your local townhall or government who will give you detailed information on how you obtain this license. You might want a Gun license too. People whose cars are being repossessed sometimes get violent.
Can you still owe money on a van that was repossessed two years ago and the company just sold it?
What state are you in? What does your contract say? Has the lender got a judgment for the balance due?
AnswerWhy did lender wait so long to sell it?? It needs to be sold in a commercially reasonable manner it doesn't look as if your van was.Send a letter demanding a break down of the costs for the van , balance of the loan and how they arrived at their numbers and demand to know why they waited so long to auction yourvehicle.It looks like they cost you several thousand dollars by waiting.How do you pay a debt to a bankrupt company?
We have a similar problem. We have an open Montgomery Ward credit card account that can't be closed because the company is no longer open. I can give you some info we tracked down that may very well help you. As of June 30, 2003: The company that is managing the MW estate is: John L. Palmer, Certified Turnaround Professional, Managing Director. NachmanHaysBrownstein, Inc., "A Team of Leaders" 822 Montgomery Avenue Narberth, Pennsylvania 19072
610-660-0060 fax 610-664-7298 cell 215-527-8950 email: jpalmer@nhbteam.com
The credit card business was purchased by GE Card Services prior to the bankruptcy and isn't part of the estate. GE fax number for GE Card Services is 203-357-6712.
Hope this helps!
Yes. Foreclosure proceedings do not begin in most states until you are a number of months behind in payments. That will negatively impact your credit report.
I had foreclosure proceedings begin on my home, but I was able to short sell the home before it went to auction. On my credit report it says, "loan was paid for less than amount owed".
