What can I expect during foreclosure?
Question:
Answer:
The lender would much rather do a short sell than a deed-in-lieu, because if they do a deed-in-lieu they then have to sell the property, but with a short sale YOU find the buyer. There are requirements for both programs. Generally speaking, lenders will not approve these if there are other liens on the property. They also normally only approve them if it’s a true hardship situation--that means you simply cannot afford to pay the mortgage and reason for that was something completely beyond your control.
If they have already initiated foreclosure (and depending on where you live--because some states take longer to foreclose than others), they may very well tell you that it’s now “too late” for these options.
If the property goes to foreclosure sale, the lender will bid at the auction. They will bid the payoff amount. If no one else bids higher, then they win the bid. This allows the lender to take ‘ownership’ of the property, which means they can sale it (in your situation, since the property is vacant, they don’t need to do an eviction).
When they sell the property, if it sales for more than the debt, the excess funds are due to you (once the lender is paid in full, any other liens are satisfied, etc). This RARELY happens. In most cases, the property sells for a loss, because if the mortgagor were able to sell it for enough to pay off the balance, then they would do that and avoid foreclosure. If there is a loss, then the lender will seek a deficiency judgment against you for the difference if they are allowed to do so under the laws of your state (and in most states, they can).
As far as quitclaiming the property to someone else, you can do that, but they will still have to bring the loan current and then continue to make the payments. You should be aware that a quitclaim removes your name from the title, but not the mortgage. So it removes your interest in the property, but you’re still legally responsible for the payment, so if it goes into default… And there is the matter of the ‘due-on-sale-clause’ which means if you quitclaim the property to someone else, the lender can call the note due in full (full payoff required). Normally, they don’t do that (as long as the payments are being made), but they can.
What you need to do is call your mortgage company and talk to them about the situation!
Good luck.
How far behind are you in your payments? Have you contacted the mortgage corporation to see if they would be willing to do a short sale? If you are only 1 or 2 payments behind the mortgage company might be able to work with you. If this is not the case, I believe you should stop trying to save this house. You should focus your positive energy on other endevors in your life. Remember it is just a house. It does not define who you are. Good luck to you in the future.
I'm not sure what you mean by "afraid of what happens after the sale", or what you want to get out of this. If the house is auctioned at a profit, less costs/fees, you get the difference. Research shows that most homes sold at auction go for at or near fair market value; you could also declare bankruptcy, and this would stall the foreclosure for awhile; as you know, the property is probably listed at the ‘rock bottom’ price that the lender will approve. Investors using shark-like tactics will continue to low-ball for offers coming in, and the only hope of saving this property at this time may be to get a serious buyer interested in home occupancy that is willing to pay what the bank is willing to accept, AND, at this point, that would only apply if the bank would grant an extension- can you stall them? You may continue to seek out qualified buyers, but you may have to brace yourself for the possibility of foreclosure if the bank decides your time has run out; don't you have a friend or family member to quitclaim this property to so you/they could continue to make the payments, or has the market gone south? There are also really good similar FAQ on this website answering the topic.
After the foreclosure, your mortgage company will of course take possession of the home. Then they will sell the home. Here is where your potiental problem really comes in. If the bank NETS less than the amount that you owe + fees then they can get a deficiency judgement against you. A deficiency judgement NEVER goes away regardless of your other credit, bankrupcies, or time.
Example:
Bank sells the home for $100,000
Maintenance Expenses - 2,000
Attorney's Fees - 3,000
________
Net to bank $95,000
If you owe $120,000 plus $5000 in late fees and front end attorney's fees then you now owe $125,000.
125,000 - 95,000 = $30,000 defiency judgement against YOU not the property.
Here is what to do. Look on the internet, the phone book, with Real Estate agents to find as many real estate investors as you can find that buy houses as-is, fast, for CASH!
There are TONS of them but each one would like for you to think that they are the only one that wants your house.
If your house is already in the foreclosure ad in the paper, then you have until April 3rd. Also look VERY closely at the ad, if there is the slightest typo, contact the attorney handling the sale and by LAW they must re-run the ad for another 4 weeks.
Back to the real estate investors. Look in the phone book under real estate of course. Call every ad in the book. Look for signs out that say things like "I BUY HOUSES." CALL THEM! Do google and yahoo searches for things like "buy houses" + your town name, county, or area.
Good LUCK! ACT FAST! You could even end up with a few extra $ in your pocket.
More Related Questions & Answers...