Purchasing a foreclosed home or home in the process of foreclosure requires expert attention to detail. You may have heard of others purchasing a foreclosure, but all foreclosed properties are not a good deal. Careful analysis should be made of each purchase with the willingness to walk away from a financially unfeasible transaction. We understand the intricate details and analysis of purchasing a home.
We can help you:
• Search for distressed properties
• Advise you concerning all details of the transaction
• Negotiate the best terms for you
• Coordinate professional advisers
• Save you stress and worry
HUD and Bank Real Estate Owned Properties For Sale
HUD homes were originally mortgaged by a financial institution and insured with FHA (Federal Housing Administration). When the property was foreclosed, HUD took title to the home. Foreclosed homes or REO (Real Estate Owned) on the mls were not insured by FHA and are owned by the financial institution which last financed the home.
This is a general overview of the three stages in the foreclosure process.
The homeowner has failed to pay the mortgage payment. After two months of unpaid mortgage payments and no workout with the lender, the mortgagor may accelerate the debt and notify the homeowner of the upcoming auction. Up until the day of auction, the homeowner may bring the loan payments current, try to work out a solution with the lender or pay off the note by selling the home or re-financing the loan to prevent the home from being foreclosed. If the homeowner has filed bankruptcy, the bankruptcy trustee is in charge and the homeowner has no control over their own home.
If the homeowner has not filed bankruptcy, we may be able to assist the homeowner in minimizing their loss with a Short Sale, Lease Purchase, Lease Option or other solutions.
After failing to pay at least 3 mortgage payments, the lender may foreclose on the home. The lender will order the foreclosure attorney to sell the home at auction on the County Courthouse steps. This process is very informal and quick. The mortgagor’s attorney will stand on the Courthouse steps to read the public auction notice, then begin the bidding at a minimum bid price as directed by the lender. The minimum bid is usually the outstanding first mortgage balance. If no one bids a higher price than the minimum bid required by the mortgagor, then the lender will purchase the home.
If the lender purchases the home, the real estate is considered a post foreclosure. The loan is charged off against the loan loss reserve and the asset is booked as Real Estate Owned. If the outstanding loan balance is larger than the price paid for the home, the difference is charged off to the loan loss reserve account.
The lender may try to sell the home to investors who have expressed an interest in real estate owned properties but as the inventory of foreclosed properties has increased, the lenders will work to list the home with a real estate agent as soon as possible. Before the lender can pass title to a buyer, any unpaid liens or judgments must be cleared from the title. Also, any federal tax liens must be paid off. Most lenders will list the home “As Is” with no disclosures. A special warranty deed instead of the typical general warranty deed will be passed to the buyer. A buyer typically has the right to inspect the property including any buyer representatives such as home inspectors, termite inspectors and appraisers; but the offer may not be subject to the buyer’s right to request repairs.
If you have any questions about this or other real estate questions, please contact us.
A “Short Sale” is when a homeowner sells their property but the sales proceeds will not be sufficient to pay off the secured loan(s) and the mortgage servicer agrees to accept less than the full amount owed on the mortgage upon the sale of the property.
Homeowners cannot simply decide to request a Short Sale; the mortgage servicer must agree. The keys to approval of a Short Sale include the following items:
• The homeowner has no financial resources to pay the mortgage.
• The homeowner has no assets to cure the default (bring the account up-to-date).
• The sale price offered by the buyer is fair market value.
• The property is in marketable condition.
A Short Sale can be completed at no cost to the homeowner. The mortgage company pays the real estate commission, seller concessions, closing costs, downpayment assistance and some repairs, if needed and agreed by the seller and mortgage servicer, to improve the marketability and financially qualify the home.
Benefits of Purchasing a Short Sale
A Short Sale is an amicable solution to a challenging problem. The homeowner wins by selling the home, paying off the mortage(s), and moving forward without a foreclosure record on their credit reports. A Short Sale is less damaging to a homeowners credit rating when compared to a foreclosure or bankruptcy. The mortgage company wins by saving the additional expense and time of the foreclosure process and removing a non-performing loan from its loan portfolio.
If you are faced with financial difficulty, please call Peachtree Fine Properties, certified Short Sale Specialist, at 770.378.8979 to discuss your situation. All discussions will be kept completely confidential.