Foreclosure Issues

Posted on May 21st, 2009 by saman

The lines below are due, in part, to many people who have contacted experts in this matter and the desire to present some viable options to those who would like to know more about this topic as well as current as delicate, because it is not easy even to think that you might lose your house! Until recently, buying a house was part of the “American Dream” all of us were excited at the quite easy prospect to become owners of a house compared to similar processes in other parts of the world … but there is also the reverse of the medal, and this should be summarized in one word, foreclosure. To preserve the integrity of the concepts as they are used here in America, we will use the specific terms, with explanations.

We fear what we do not understand or not know and for many, the notion of foreclosure, and its direct implications are unknown. We begin with a brief description of the “foreclosure” legal procedure by which a lender (bank, financial institution) obtains possession of property used as a guarantee by the guarantor after lack of payment of the mortgage on term (mortgage payment). The procedure in case of foreclosure starts if you do not pay a mortgage for at least 90 days. First, the bank or financial institution, which offered the loans for the house purchase, will try to collect the amounts due and will send letters that require immediate payment of amounts due or the intention of the bank to require eviction of the owner and the sale of the house at auction.

From the banks points of view, which are now flooded by properties whose mortgage payments are not up to date, a compromise with the current owner is preferred to auctions! Below, we will present some of the options that you have as an owner in case they are, for various reasons, unable to pay the mortgage loan.

Short Sale

After the bank recorded to a territorial court a Notice of Default- the legal instrument that shows that the owner failed to pay the monthly mortgage, but before the auction, the bank may accept an offer for an amount less than the due credit. Many banks prefer this method thus avoiding the additional costs both related to foreclosure, and to the idea of finding a qualified comparator. The procedure is more complicated and more difficult to achieve if the house has been funded 100%, the so-called loans “80/20″. Often, the first bank that owns 80% of the loan will recover most of the money or all the money and the second bank will ask the owner to take this debt trying to obtain a “deficiency judgment or claim”, the owner taking over the amount funded. The procedures, foreclosure, and short sale affect negatively a person’s credit, but it is important to see that after a short sale the time necessary to obtain a new bank loan to buy a house in terms that favours the buyer is at least 24 months, while in case of a foreclosure it is at least 36 months.