What to Expect from Foreclosures
Posted on October 15, 2008
Filed Under Foreclosures | Leave a Comment
If you are like many homeowners who have a mortgage, you are probably very diligent about keeping up on your monthly payments and not getting behind on your mortgage. There are some situations and circumstances however, that do arise and prevent some people from being able to pay their monthly loan payments on their mortgage and end up in default on their loan. What happens after that is what most homeowners fear and dread the most about their mortgage – losing their homes.
Bankers and lenders are forced to take the property that is being mortgaged when the loan goes into default – they do not want to take someone’s home away from them, but when a mortgage goes bad and the debt is not being paid, they have no choice but to collect on the collateral that was used to secure the loan which is the home or property itself. What happens during the process of a foreclosure? Well, there are steps involved and the end result ends up being that the home or property is put up for sale by the lender or banker whom the loan is with and the proceeds of the sale of the home or property belong to the bank.
Usually, the home or property that is returned to the bank becomes a foreclosed listing and is sold through an auction or Realtor service. Auctions that sell these foreclosed properties can be in the form of a public or private auction and sometimes, the property or home can also be sold directly from the lender or banker before the auction. The foreclosed properties are often sold at only 60 to 80 percent of the total market value. The market value is calculated using a number of different factors that include the value of the homes around the foreclosed property, the going market rates and the current trends in the market.
After the bank officially announces it will have to do a foreclosure on the home, the home owners will have a given amount of time to find a new residence and then turn over fully the home or property to the banker or lender. Once the lender has the home or property in their possession, the process of estimating the market value and doing a professional appraisal will begin. The time element that this process happens is can vary greatly depending on the amount of work that needs to be done to the home or property before putting it up for sale, and when the auction is going to take place. The property or home remains the possession of the bank until it is sold to a new homeowner. The new homeowner then takes out a mortgage on the property and the original proceeds from the sale of the home are returned to the banker or lender.
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