Steps Involved In A Formal Foreclosure

Posted on August 29th, 2008 by saman

A foreclosure can be defined as a legal proceeding by a bank or financial lender against the owner of a house on grounds of irregularity and default in the mortgage loan. A foreclosure comprises of various processes. Foreclosure is in fact an elaborate process consisting of a number of steps to ultimately succeed in foreclosing a house. The processes include pre-foreclosure, public sale and lastly bank owned. It is very much possible to buy houses in each of the foreclosure steps if you rightly know that from where and from whom you can buy such houses.

Pre-foreclosure as defined by a bank is the time gap between decision of the bank to foreclose a property and the proper execution of the foreclosure takes place. The process is elaborate. Firstly, the bank has to send a notification to the home owner about their intent and decision. Such a notice is known as NOD (Notice of Default) or better known as LIS Pendens. The NOD should be filed with the County Recorders Office. Such a notice is confidential and the bank is not supposed to release such information to the investors. But the investors are curious themselves and are free to find out the listed people in the pre-foreclosure notice by searching the records at the County Recorders Office. The investors will then resort to their business plan. They simply contact the owners of the homes and negotiate a deal. They try to procure the best deal to purchase the property before the house is actually foreclosed. The deals are a welcome gift to the house owners. The deals are thus attractive to the home owners who would rather accept the deal rather than have a foreclosure record to their credit.

The second step after a foreclosure proceedings begin is the release of NFS (Notice of Foreclosure Sale) or NTS (Notice of Trustees Sale). These are generally filed. The filing automatically ensures the home to be foreclosed which is ready for auction. An auction is a place where the general public can bid on the home that has been foreclosed upon or devoid of the former house owners. The person who makes the maximum bid is declared the new owner of the house and they are eligible to live in the house from then by replacing the original owners. Lots of foreclosed houses are available online for sale. Buying foreclosed houses are the best ways to buy houses at prices significantly less than the original prices.

There are properties which have already been foreclosed and are completely owned by the lender. Such type of property is called bank owned or rather formally termed as REO (Real Estate Owned) property. It is then in the hands of the lenders on the sale of such foreclosed homes. They can either sell it in auctions or directly sell the house to someone to recover the entire money it owed regarding the property. There are sufficient instances where individuals have acquired houses for meager amounts in case of REO houses. The bank only wants to revive all the money it had spent on the deal and wash their hands off the matter. The bank is least interested in procuring property which is not their field of interest. Homes which had been foreclosed before can be obtained at 30% lower than the actual market price of the house.