Foreclosure and Short Sales Revisited
Because we are real estate agents as well as mortgage brokers we perhaps receive a disproportionate share of inquiries about what to do and how to handle mortgage difficulties. Other than directing the people to appropriate sources of information or help we have to be silent. We can not offer advice, suggestions, guidance, or even hints as to the "best" course of action for any person , or for any set of circumstances. This is not because we don't know or care, simply that we are not licensed to give legal advice or financial counseling, both of which are required to address mortgage delinquencies and the impact of various remedial strategies. We can and do offer advice as to the market value of property and the approximate time required to sell the property. And that's it. We suggest to everyone that legal counsel be obtained and financial guidance be sought, because whatever happens you can be assured there will be legal and financial consequences for action or inaction whenever mortgage delinquency occurs. Having said all that, we can still discuss the process of foreclosure and provide timeline information, and talk about what a short sale really means. Here is a foreclosure timeline under CA law: Foreclosure Timeline for California
(The foreclosure timeline and process varies from state to state. In California it is generally non-judicial and done outside of the courts but some states have judicial foreclosure. Be sure you understand the correct process and timeline in your state.
Day 1
You are in default on the 2nd day after your payment is due.
Day 32
You have now missed two monthly payments.
Day 32-90
Sometime during this period you will receive a letter stating that the Notice of Default(NOD) has been recorded. The speed with which lenders record the NOD depends on the policy of each individual lender.
NOD Recorded
From this day, the next 90 days is a silent period in which you can pay lender all back payments, fees, and other charges and your default will be cured.
Trustee Sale Date
At the end of the 90 day silent period you will receive another letter specifying the date that the Trustee’s Sale will take place. This is usually 3 weeks from the date you receive this second letter.
Right to Cure
You have until 5 business days before the Trustee’s Sale to reinstate your loan (cure) by paying all payments, fees, and other costs associated with the foreclosure.
Eviction
After the Trustee’s Sale you may have up to 30 days to remain prior to being evicted.
Short Sale has become a common expression and sounds as if it's a commodity rather than an event. Quite simply it's the agreement of a lender to relinquish their right and interest in a property for less than the amount they are owed by contract (short of the amount due). It is an agreement which must be negotiated between the lender and the debtor and is going to be unique to each circumstance. The lender obviously must feel threatened by a greater loss if the short sale is not agreed to, otherwise why agree to any loss at all? As noted above, the consequences of this negotiated agreement are both legal and financial, and should not be entered into without professional guidance. The lender will have experience and legal talent in depth on their side. The borrower should have no less.
As to the market for short sale properties, buyers should be aware that there are now two parties to negotiate with in the purchase, and the lender is remote, may have many different staff people handling the matter so continuity is non-existent, and has no emotional interest in the outcome. The lender is not going to be anxious to accept less than fair market value so there is really no built-in advantage to bidding on a property just because it's offered as a short sale. Caveat emptor is in full force in this situation. The weapons are all on the other side.
If you're contemplating a short sale agreement we'll be happy to discuss the listing of your home with our office, but whether we accept the listing is going to depend a great deal on our perception of the level of cooperation we can expect from your lender and how effectively we can communicate with them. We owe that much to you and to prospective buyers.
I hope some of this helps someone.
As Usual,
thanks for visiting.
(The foreclosure timeline and process varies from state to state. In California it is generally non-judicial and done outside of the courts but some states have judicial foreclosure. Be sure you understand the correct process and timeline in your state.
Day 1
You are in default on the 2nd day after your payment is due.
Day 32
You have now missed two monthly payments.
Day 32-90
Sometime during this period you will receive a letter stating that the Notice of Default(NOD) has been recorded. The speed with which lenders record the NOD depends on the policy of each individual lender.
NOD Recorded
From this day, the next 90 days is a silent period in which you can pay lender all back payments, fees, and other charges and your default will be cured.
Trustee Sale Date
At the end of the 90 day silent period you will receive another letter specifying the date that the Trustee’s Sale will take place. This is usually 3 weeks from the date you receive this second letter.
Right to Cure
You have until 5 business days before the Trustee’s Sale to reinstate your loan (cure) by paying all payments, fees, and other costs associated with the foreclosure.
Eviction
After the Trustee’s Sale you may have up to 30 days to remain prior to being evicted.
Short Sale has become a common expression and sounds as if it's a commodity rather than an event. Quite simply it's the agreement of a lender to relinquish their right and interest in a property for less than the amount they are owed by contract (short of the amount due). It is an agreement which must be negotiated between the lender and the debtor and is going to be unique to each circumstance. The lender obviously must feel threatened by a greater loss if the short sale is not agreed to, otherwise why agree to any loss at all? As noted above, the consequences of this negotiated agreement are both legal and financial, and should not be entered into without professional guidance. The lender will have experience and legal talent in depth on their side. The borrower should have no less.
As to the market for short sale properties, buyers should be aware that there are now two parties to negotiate with in the purchase, and the lender is remote, may have many different staff people handling the matter so continuity is non-existent, and has no emotional interest in the outcome. The lender is not going to be anxious to accept less than fair market value so there is really no built-in advantage to bidding on a property just because it's offered as a short sale. Caveat emptor is in full force in this situation. The weapons are all on the other side.
If you're contemplating a short sale agreement we'll be happy to discuss the listing of your home with our office, but whether we accept the listing is going to depend a great deal on our perception of the level of cooperation we can expect from your lender and how effectively we can communicate with them. We owe that much to you and to prospective buyers.
I hope some of this helps someone.
As Usual,
thanks for visiting.
posted by Douglas Doss | 12:49 PM
|
0 comments
