Foreclosure happens more often than you think even when the economy is said to be on an upswing. But what is foreclosure?
It’s a legal process whereby the lender takes over your property after missed payments. They can do that because unless you have completed your mortgage payments, the lender is the true owner of the house.
Although different states differ in the specifics, the foreclosure process starts when the lender files a Notice of Default entered into the public record which shows the address of the property and indicates the owner is behind in mortgage payments. At this stage, your credit score is still unaffected.
Although different states differ in how soon a lender can file a Notice of Default, in general, states require a period of sixty days from the date of missed payment.
During this time, you can negotiate with your lender to be up-to-date on your payments. You could also sell the property to us. Just provide us with details on your situation.
When the default notice is filed, the lender must wait a period of 90 days before auctioning or selling the property. After this time, the lender will run a notice in the newspapers inviting bids and buying offers.
The occupants of the property are generally given priority bids, which means that their bid on the property is considered first before others. If the house is sold to someone else, the occupants will need to move out.
The best way to solve a foreclosure problem is to avoid it. If you feel that you are going to miss out on payments, call your lender immediately BEFORE an upcoming payment date is due.
Lenders typically do not want to foreclose and are willing to work with borrowers so payments can be made. The lender might agree to forbearance or give the lender extra time to make payments.
If not this, they might agree to a repayment plan that divides the sum of the missed payment over a period of months on top of current payments. Debt forgiveness is also another option, but this rarely happens.
A short sale is also an option. A short sale is an agreement whereby the lender agrees for the borrower to sell for less than the mortgage due amount.
Typically, banks are open to a short sale because they lose more money in a foreclosure. How does a short sale affect your credit score?
According to FiCO, a short sale has the same effect as foreclosure, however, credit scores drop a few points less and it would be easier to buy another house than if you had a history of foreclosure. After foreclosure, credit scores typically drop 85 to 160 points.
So, now that you know what foreclosure is, it’s time to take action. We can help no matter stage you are in foreclosure.
We are in the business of buying houses on pure cash offers or short sales for homes in Florida. Contact us to see how we can help you.