What Is A Foreclosure?
Foreclosure is a legal process that a lender goes through in order to take possession of a property for which it holds a mortgage. Foreclosure terminates all rights of the homeowner and gives all rights of the property to the lender.
The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.
Foreclosure proceedings start with a default by the homeowner. Missing a payment is the only way a property can enter the foreclosure process. This can also be a missed payment on local taxes, a condo association or homeowners association.
The lender must notify the homeowner by legal notice that they are entering into the foreclosure process. This can be done through either personal service of a document or if the homeowner cannot be located through publication if a legal journal. This notice is called a Lis Pendens.
The homeowner is informed that there will be a bank sale or auction date at which point the lender will gain control of the property. If your property cannot be sold for what is owed, a deficiency judgment could be pursued against you.
There is a redemption period when the homeowner may present payment to the bank and regain possession of the property.
What is an REO?
‘REO’ stands for ‘real estate owned’ and refers to the inventory of real estate that banks and mortgage companies have foreclosed. If you see a listing for a property that says “REO,” it means that it’s a property that the lender has taken back. After repossession and the property becomes classified as REO.
The lender then attempts to sell the property on its own through an auction or direct marketing through a real estate broker. We sell REO properties for HUD, HomeTelos, Fannie Mae, Freddie Mac, Chase, Bank of America, New Vista Asset Management and many more.
REO properties are usually in poor shape in terms of repairs and maintenance. Getting a response to an offer on an REO property will take longer than normal. With so many foreclosed (REO) homes on the market, the people who handle the sale of these homes are overwhelmed with work. That being said, you can often find good deals with an REO property. If you have the time, the patience and good financing, there are lots of opportunities to be had.
