Pre-Foreclosure & Foreclosure
Don’t let the bank take your house!
The foreclosure process isn't something any homeowner wants to go through. And yet, the Mortgage Bankers Association estimates that 250,000 new families enter into foreclosure every three months in the US.
So how does a typical foreclosure work?
Here's a look at the steps a homeowner will likely go through—plus some ways 1st Home Solutions can help stop the foreclosure process from happening by purchasing your home.
Foreclosure process explained
Step 1: Default
A bank can't just start the foreclose process whenever it wants. Homeowners have to first default on their mortgage, failing to pay the required monthly payments. It's rare for lenders to begin the foreclosure process after just one late mortgage payment.
Lenders will usually give borrowers a grace period because they recognize most people face a temporary financial hardship at some point in their lives.
That said, banks still want their money, so borrowers can expect an influx of emails, letters, and phone calls from their lender or bank trying to collect their payments.
Lenders usually offer alternatives during this period, including different payment plans to help the homeowner get back on track, keep their home, and keep paying their monthly mortgage payments. This is partly because it's in a lender's best interest to make things work—after all, the lender wants their money. But it's also the law in many states.
A lender cannot file a notice of default until 30 days after contacting the homeowner to assess the homeowner's financial situation and explore options to avoid foreclosure.
Termed a foreclosure avoidance assessment, this period might include requests for a payment adjustment, interest adjustment, deferral, or other accommodations.
You can also get foreclosure avoidance counseling at HUD.gov. Selling the home to cover the mortgage might also be an option at this point, so call a real estate professional like 1st Home Solutions during this time to take advantage of all your options.
It is not uncommon to see homeowners sell their home, pay off the missed mortgage payments plus fees, and then downsize to a more affordable living situation and avoid foreclosure all together.
Step 2: Notice of default/ lis pendens
If a borrower is unable to come up with the funds to pay what he or she owes, the lender will issue a notice of default or also refereed to as a lis pendens. This form is sent to the mortgagee in the mail via a certified letter, and typically gives a homeowner 90 days to pay off the most recent bill.
This step marks the beginning of the formal and public foreclosure process and is not to be taken lightly.
There is still time to save your home after a notice of default—if you can find the cash. One option is a mortgage reinstatement, whereby you “reinstate” your mortgage by making up all the missed payments at once, plus interest and lender fees. You'll then go back to paying your monthly bill as originally agreed upon.
Step 3: Notice of sale
If a homeowner hasn't come up with the money within 90 days of the notice of default, the lender may proceed with the foreclosure process. Next comes a notice of sale, which will state that the trustee (the lender) will typically sell the home at auction within 21 days.
A notice of sale is also sent via certified letter to the homeowner, but it also must be published weekly in a newspaper in the county where the home is located for three consecutive weeks before the auction date. This helps promote the sale to potential buyers, but even at this late date, the option to reinstate your mortgage is still possible up until five days before the sale, so long as you can come up with the money and this may vary jurisdiction. You may also be required to file an “intent to cure” up to 3 weeks out from the auction date.
Step 4: Auction
The home will be sold at a public auction to the highest bidder, who will have to pay the full amount of the bid immediately. This buyer will receive a trustee's deed once the sale is complete, at whic point he becomes the official owner.
From there, the home's new owner must serve any remaining occupant of the home with a three-day written notice to “quit” (move out).
What happens if a foreclosed home doesn't sell?
If a house isn't sold at auction, the property becomes what's known as an REO, or real estate owned property. But don't assume this is a free pass to stay in the home. If the bank owns the foreclosure, they will often arrive at the property shortly after the foreclosure date and kick you out.
How 1st home Solutions can help
First 3 Months Default
When you default as a borrower it’s usually do to a hardship either financially or other, and at this point you may have missed a payment or two. While serious and scary there is still time to avoid foreclosure.
If you want to stay in the home, we encourage you to find the money wherever you can, borrowing from family/ friends or dipping into your savings or retirement to make your missed payments and any interest and lender fees.
Whether you are unable to raise the money or you just don’t wish to continue living in the home; then 1st Home Solutions can make you a fair cash offer on the property to save you the hassle and fees of selling traditionally with a real estate agent, as well as the limited time you have to save yourself from foreclosure.
After Notice of Default
You will typically receive a “notice of default” or “lis pendens” as soon as 1 missed payment or 30 days but usually no later than 3 missed payments or 90 days. After you have received one of these notices the clock starts ticking. Typically you have 90 days to bring your mortgage and all fees current.
While each lender and county may vary, homes are usually auctioned between 6 to 9 months from the date of the first missed payment, with a current average of eight months in Colorado.
When you receive your notice of sale you are left with an approximate 1-2 month window to file your intent to cure, bring your mortgage and all fees current before the date of the auction.
Our mission is to offer a solution to people in these tough situations, but because we are NOT a lender it is illegal for us to give you money to bring your mortgage current. However, we believe at this point the best solution to reinstate your mortgage, bringing it current; including all the fees and avoiding foreclosure is to sell us the home.
We understand that if you have substantial equity in the home it needs to be considered. Therefore we will negotiate a fair purchase price to be figured after all costs and fees to bring the mortgage current, repairs needed and costs and fees to market and sell the property. This is a great option to transfer the burden of repairs, the sale of the property and avoid Foreclosure; all while putting cash in your pocket.
If the home has little to no equity that an immediate sale would result in a loss or you still owing money to the Lender, then a possible solution may be to sell us the home now with a future closing date. Meaning we will make your loan current and make all your payments going forward and then rent or lease option your home for several years to recoup our costs and build the equity up to a point where the home will be profitable for both sides. This benefits you buy avoiding foreclosure and you get to keep the tax deductions from owning a home. The homes mortgage will have been paid down in a few years (by a renter) you will also receive money at the future sale. This option again isn’t for everyone but turns a potential foreclosure and huge loss into a profitable one for both you and 1st Home Solutions.
It is always our goal to be transparent about how our investment company operates and to provide a win win scenario when working with home owners. However, every situation is different although you may not have equity in the home, there are many other solutions so don’t worry.
After “Notice of Sale”
After receiving the “notice of sale” there is still time to avoid foreclosure and auction but not much. You need to act fast and sell your home or bring the mortgage current but that time frame is usually less than 30 days.
Once your home has gone to auction there is nothing we can do to stop that process whether it sells at auction or not. The bank has notified you each step of the way and because you failed to take action you will be kicked out of your home and now have a foreclosure on your record and owe the remaining balance of the mortgage.
NEED TO SELL A HOUSE IN FORECLOSURE?
If you need to sell a house in foreclosure, 1st Home Solutions can help.
Are you late on your mortgage payments? Have you fallen behind on your bills? Do you have a decent amount of equity in your home? 1st Home Solutions can help stop foreclosure today. We will offer you cash for your house before the bank can foreclose and take your equity. If the tough economy or unplanned events left you and your family facing foreclosure, we can help you sell your house fast and for cash! Foreclosure is a tragedy to any homeowner. There are several things that could have happened in your life that led you to this point. You may have lost your job, lost a family member or made a wrong investment decision. You can also be led into this situation by a divorce. Whatever the reason, if you are facing foreclosure at the moment, we can help you get out of it. The more you continue to wait, the worse the situation becomes. We are the solution to your problem. We are here to help you stop foreclosure and sell your house within the shortest time possible. There is never any obligation or pressure to sell your house by contacting us. If you do decide to work with us to buy your house, then we will be happy to answer any of your questions – including how soon you would like to close and get paid.
Need To Sell Your House Fast For Any Of These Reasons?
Divorce settlement
Tenant problems
Need major renovations and repair
Can’t afford realtor commissions
Notice of default
Facing foreclosure or in foreclosure
Emergency
Relocating soon
Moving away
Unused property
mortgage problems
Bankruptcy
Owe liens
Over leveraged
Expired listings
Just can’t wait to sell
Hard-to-sell damaged and neglected property