Understanding the Four Stages of Foreclosure

When you buy a house, you do not consider the fact that someday you may run into financial problems and that foreclosure may be something that you're facing. Many people panic and think that when they fall behind on their mortgage, there really is no way out. The fact is that there are many options for those who face foreclosure if they do things in a timely manner.

There are actual stages of foreclosure that a person will go through, and actions you can take at each stage to possibly forestall or even prevent the foreclosure. If you know what the stages are, you can better plan how to get out of foreclosure. By knowing what to expect and what you can do, you will be on your way to saving your home.

The first stage: Your mortgage is late. There can be many reasons that make you fall behind on your mortgage. Perhaps you fell ill or you were laid off. No matter what the reason for which you lost your steady income, the fact is that you fell behind on your mortgage so now you are trying to make ends meet and save your house. You want to be sure to keep in contact with your mortgage company. Many people make the mistake of ignoring their lender and that can be very damaging to the loan. You will only add to the late fees you are accruing and there can be other costs as well when you neglect your lender's enquiries.

The second stage: Once you are late, you suffer the consequence of being reported as late. There can actually be legal fees that may apply due to the fact that your lending is filing for foreclosure. Your delinquency will be reported to the main credit agencies and this will damage your credit rating.

The third stage: Once the above stages have passed, your lender may start foreclosure proceedings. This can entail having you evicted from the property. Most lenders will give you anywhere from one to three months to get things in order to try and fix things. If you fail to fix things then local law enforcement officials may come to forcibly remove you and your family from the property.

The fourth stage: Once you have been removed from the property and the house is vacated of your belongings, your house will be auctioned. At this point, you still have a change to retain your property since you also have a right to bid on it at the auction. You may actually be able to buy your house at auction for a fraction of the cost that you owed on it.



Stephan Iscoe
Publisher,
MoneyMakersNews.com

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What You Need to Know about Deeds for the Transfer of Real Estate

by Bob Miles

The transfer of real estate involves particular dangers that are far more pronounced that the dangers involved in buying, say, a car or a hair dryer – and not just because real estate is more expensive either! One of the primary dangers is that the person who’s selling you the real estate doesn’t actually own it. This is more complex than you might think. Imagine shelling out a couple of hundred dollars for a prime parcel of beachside real estate only to have Paul Plaintiff sue you five years later claiming that Joe Grantor sold that property in 1895 to his great-great grandfather first as a passive investment, and then Mr. Grantor turned around and sold the same property in 1896 to the guy that sold it to the guy who sold it to the guy who sold it you. In that case a court might just award the property to Paul Plaintiff and you’d be sleeping on the beach digging for buried change with your metal detector. Of course you could always go after the guy who sold it to you in the first place, demanding a load of money from him. But this would do you no good if (1) he sold it to you under a quitclaim deed, (2) you couldn’t find him, or (3) if he didn’t have the money to pay you. In order to guard against this sort of thing, several safeguards have been developed and if you’re considering purchasing real estate you need to know how they work.

1. Title Insurance this is by far the most commonly used. A title insurance company will have their lawyer check the chain of title at the local land office to see if they believe there’s a possibility that there might be someone out there with a claim to the property that’s superior to yours (you can never be absolutely sure). If they’re satisfied, they’ll insure the title to your property.

2. Warranty Deeds - Warranty deeds will contain up to 6 warranties against title defects, and you can use them to sue.

3. Statutory Deeds – some states allow these types of deeds, and although they provide some protection, they are not as effective as warranty deeds.

Don’t buy real estate under a quitclaim deed without (i) carefully checking the chain of title, and (ii) demanding and receiving a deep discount on price to reflect the risk that your yard may be pulled out from under you some day.

DISCLAIMER: The following is intended for reference only and not as legal advice.


Real Estate Law in Plain English explains real estate law without the legalese.

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My Rules When Dealing With Private Lenders That Fund My Real Estate Deals

by Alan Cowgill

This is my business. After many years in a corporate job working for others, I left because I wanted to run my own business my way and that's exactly what I am doing. I am using my business skills to create the kind of company I want. Along with creating my own rules, procedures, and systems within my real estate business, I have rules that I follow regarding my private lenders. A couple of my rules are:

a) Make interest payment when property sells
b) One private lender per mortgage
c) I keep my word

Let me further explain what I mean on each of these...


a) Make interest payment when property sells...
I didn't start out that way. I thought everyone would expect monthly or quarterly payments, so I started paying some early lenders monthly. But after a conversation with a RE guru, I quickly changed and now pay when the property sells. What a huge benefit to cash flow and what a BIG help with the office paperwork. Not only is this a matter of less paperwork for the staff, there is another practical reason for doing this. When a lender's money is applied to a property at closing, the clock starts ticking. The interest rate starts. However, it may take a couple months to renovate the house and find a buyer or rent-to-own tenant. So the cash flow from the property will not even start for a couple months.

In addition, when you sell the house the lender gets a bigger chunk of money to lend back to you for your next project. Everybody wins.

b) One private lender per mortgage...
The #1 question I get from all over the country is "can I pool lenders money". The answer is maybe.

You cannot "pool" lender's money unless you fill out some paperwork with your state.

So, if you need more funds to purchase and rehab a property, then the 1st lender (the one with the most money) gets a 1st mortgage on the property and if you need more money to rehab the property, bring in a 2nd lender and they get a 2nd mortgage.

They are your "Bank" and they get a mortgage (lien) on your property.

You take possession of the property in a land trust and you get the deed. The lender gets a mortgage. These are the two key documents on any real estate transaction.

Actually, you can have as many mortgages (1, 2, 3, 4, etc.) as you like on a property as long as you don't over leverage the property.

c) I keep my word...
I follow my agreement with each lender exactly. I run my business with integrity. Like I said earlier, my rule now is that I make interest payments when the property sells. But there are a few early lenders with whom I made the agreement to pay monthly. I will stick to my agreement with them regardless of how long they invest with me. And, since they love those checks, they'll probably be around a long time -- and that's great as far as I'm concerned.


Alan Cowgill is a national speaker, author, and real estate entrepreneur. Alan had bought or sold over 200 investment properties. His step-by-step system "Private Lending Made Easy" teaches Real Estate investors and mortgage brokers how to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio CD go to http://www.PrivateLendingMadeEasy.com
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Foreclosure and Home Devaluation

by James Copper

While just about everywhere in the United States the real estate market has come back robust and healthy and most people can count on their house selling after a short period on the market, there are some states whose residents are facing foreclosure in record numbers.

Ohio, Georgia, Texas and Florida are reeling from recent economic havoc created by their areas industrial demise and the subsequent concentration on the service industry with its less plentiful and poorer-paying jobs. Benefits for these service industry jobs are not nearly as good as those in the prior industrial industry, and in some cases they dont exist at all.

The mid-Atlantic states have been suffering from this loss of manufacturing jobs and firms for decades now and foreclosure and devaluation of homes has become commonplace.

Foreclosure might have been staved off in many of these situations, however, had the homeowners not been the victims of some less than reputable lending plans and firms, with ill advised financing options such as interest only loans that left these borrowers with little home equity when they needed to refinance or secure a second loan to save their home from foreclosure.

The interest only loans left them with little or no equity which meant no collateral for the loan. Their homes fell into foreclosure as a result.

An interest only mortgage loan is one in which the monthly payment is exactly the amount of the interest accrued so far on the loan and doesnt touch the principal.

This interest only feature only lasts for about the first five to ten years of that loan, and while borrowers have the right to overpay at any point their overpayment only goes to future interest payments - again, not the principal.

What this means is that for the years of the interest only option the borrower isnt paying off her or his loan. A 100,000 mortgage in 2000, with an interest only option for 10 years, will still have a balance of 100,000 in the year 2010.

Were the borrower to run into difficult making these payments and find the threat of foreclosure hanging over their head, they could be in serious risk of foreclosure. Lets assume, for example, that the houses market value in 2010 was 120,000.

Since literally none of the borrowed 100,000 had been paid off the equity in the home would be at a mere 20,000. If, however, the mortgage payment made each month to the borrower included 200 towards the principal at the end of that 10 year period the borrower would have another 24,000.

Actually the equity would be much greater because as the principal was paid down the interest on the balance would decrease and the same payment would pay more of the principal and less of the interest. This additional equity might save a home from foreclosure if the borrower were to get sick, lose a spouse, lose a job or otherwise get into financial trouble that made payments late or missed.

The general rule of thumb is that interest only loans should not be considered unless you know for a fact that your earning power five to ten months down the road will greatly increase and your outstanding bills will decrease.

Then the risk of paying a little bit now and a lot later isnt as great. You wont be risking foreclosure.


James Copper is a repossession consultant for http://www.repossession-stopper.co.uk/home_repossessions.php
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How to Buy Foreclosures at Real Estate Auctions

by John Ferreira

Attending The Auction -

A foreclosed property can be purchased at several different stages and sometimes they get auctioned off at an actual auction. There are several reasons why it would end up being sold this way:

1. The debt on the property is so high that if purchased before the auction there wouldn't be any profit potential.
2. The seller wouldn't sell before the auction
3. The seller can't be found
4. You have more cash on hand than time.

Anyone wanting to buy foreclosed properties at an auction should attend a few to get familiar with the way they work. They do present some great opportunities but some trappings as well. Some things you can expect are:

They are over very quick. You can be a few minutes late and miss it. Like any other auction there can be more spectators than qualified bidders so you can have the auctioneer verify everyone's qualifications by showing the required certified check before the auction starts. This way you know that the person you're bidding against is actually qualified to raise a bid and cause you to lose real money.

Any serious bidder must do thorough research on the financial situation of the property. You could bid up to $375,000 on a property valued at $500,000 and think you got a great deal then find out there was a $150,000 1st mortgage still in place. Knowing about this 1st mortgage you could verify your bid to be "above the 1st" and not "subject to the 1st" and so your bid would be from a base price over the 1st mortgage.

If you are the high bidder on a 2nd mortgage you can take over a 1st FHA or VA assumable loan. If the bank is the highest bidder on a 2nd they can substitute you and lend you the FHA money. The bank is usually the high bidder especially in states where auctions require all cash deals. Sometimes a private investor is the high bidder and sometimes the auction can be postponed all together.

Some things you need to know:

Depending on the state you are in, cash needed the day of the auction is 10% to 100%.

If you bid and win, then change your mind after putting down the deposit you can forfeit your deposit and be held liable if you change your mind.

Verify the bank's bidding instructions to the auctioneer because a lender may bid substantially less than the debt they are owed. The rules and laws vary from state to state but you can get much of the information on your local foreclosure procedures and bidding instructions from the sheriff's office or the court office clerk. Foreclosure properties can be a great way to make some very high profits in real estate in a short time but you must take the time to learn how to play the game and due the required research or else it can be a great way to lose money too!


Get tips and information on how to build your wealth the way most millionaires have; through real estate investment techniques such as foreclosure real estate and flipping at www.Real-Estate-Wealth-Builder.info

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How Do I Find Homeowners Facing Foreclosure?

If you are ready to become a real estate investor who primarily focuses on PreForeclosures, let’s first examine how you’re going to contact these homeowners. If you can’t speak with a homeowner facing foreclosure, then you’re not going to be a very successful PreForeclosure investor.

Unfortunately, you can’t just go down to your local foreclosure store and start talking to people! Realize that a pending foreclosure, for most people, is a very personal, and often embarrassing situation. Most people don’t advertise the fact that they’re having problems making their mortgage payments, which makes it difficult to contact them.

Don’t worry, however, since there are many methods to finding these people. My personal favorite method of finding these homeowners is to have them contact me! That way, I know that they are looking for help, and that they are motivated to stop the housing debt problem that they’re currently facing.

When the bank decides to foreclosure on a homeowner’s property, they file what is often called a Notice of Default or Notice of Trustee’s Sale. This is done at the local county courthouse of the county that the respective property is located in. The bank sends this notice and it is posted as public record. That means that anyone who can find the county courthouse records can see this public information.

If you’re going to be a PreForeclosures investor, knowing what new foreclosures are being filed at the county courthouse is very advantageous. It gives you the inside track as to which new foreclosure filings are being recorded in your respective county.

Another avenue to finding homeowners facing foreclosure is to have them find you! This may sound counterintuitive, but when a homeowner calls us looking for help, we know that they’re really serious about stopping their foreclosure.

How would a homeowner find us if they wanted to stop foreclosure? If we advertised, they could find our name and number. This could include print or online advertising.

We could also network so that others know we are in the foreclosure prevention business. Classic examples of people to network with would be people who would hear about someone being behind on mortgage payments. This list of people could include realtors, loan officers, bankers, attorneys, even the local mailman, just to name a few.

If you’re serious about becoming a PreForeclosure investor, you have to get your name out there so people can contact you about help with their home. You can do this by contacting them directly, or marketing yourself and your company so that the homeowner can contact you directly.


SaveMeFromForeclosure.com, LLC, provides foreclosure prevention and consultation services helping homeowners stop foreclosure on their properties. The company was launched in 2004 and officially formed in 2006. To learn more about how you can work with SaveMeFromForeclosure.com, LLC please visit http://www.bestforeclosuresystem.com/

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