What is a foreclosure

What is a foreclosure?

A foreclosure is the legal means by which a lender seeks the collateral of a borrower who has defaulted.  Default occurs when a borrower fails to meet the repayment terms of his or her loan contract.  In the context of real estate, this typically involves the repossession of someone's home or property. The first missed payment is technically considered default, but most lenders are not likely to begin the foreclosure process until a consecutive amount of payments have been missed.

How long do most foreclosures take?

The process of a foreclosure can take anywhere from 3 months to a year, depending on the real estate statutes of your state. A typical foreclosure process may follow this sequence of events:

• The process starts when the borrower defaults (misses) on their loan payments. The lender will generally send notification to the borrower informing them that they are in default.
• If the borrower is unable to or does not settle the missed payments, the lender then takes legal action.  Depending on your state statutes, the borrower either:
• Files a lawsuit to foreclose with a court of law or;
• Files a notification to foreclose with the county's public records office
• The property is advertised at a public foreclosure sale and sold to the highest bidder. If there are no acceptable bids from the public the lender takes the property back.

What can I do if I am faced with foreclosure?

The first course of action you should consider is contacting your lender as soon as you realize you are unable to meet your borrowing commitments.  Generally speaking, most lenders want to help borrowers keep their homes, as the foreclosure process is very expensive for every party involved. Your lender may have assistance programs available to help you come up with a financial plan to avoid foreclosure.  Also, check to see what government programs and/or services you may qualify for #333333; font-size: 10pt">Deed-in-lieu
The lender may allow you to voluntarily give back your property as settlement for the mortgage. This option is only available after attempts at selling the house before foreclosure has been unsuccessful and there are not other liens against the property.

Be aware of Scams

Any offer or solution to avoid foreclosure that sounds too good to be true probably is. Do some research and know your rights before you sign any contracts or pay any lending or broker fees.

What is the REO Process?

A Real Estate Owned property or REO is the name for a foreclosed property when the ownership is returned to the Lender. REO properties can be a great way to buy homes at cheap prices. Buying from a bank can be a difficult process and also can be worth the extra effort. Have your agent check for bank owned homes, this can keep you out of a Short Sale and possibly find you a grea deal along the way.