With the market picking up, the era of the short sales is pretty much non existent, but we are the "Normal" Foreclosures, or Foreclosures with Equity. What happens if there is equity and the bank forecloses, will I lose my Equity in a Foreclosure? Does the bank keep all the money? The answer is Yes. Every red cent.
Most of what we are seeing with these Equity Foreclosures, are families that have come into hard times; Death of a family member, illness, Divorce, or loss of a job. Homeowners are unable to keep up with the Mortgage and fall behind. With the values increasing, the Homeowner can still benefit from the Sale of the home and avoid a Foreclose or Short Sale. I helped a Homeowner 2 years ago to sell her home in Foreclosure. She moved and rented while working on repairing her credit from the Mortgage lates. She received approximately $30,000 in proceeds, she is now pre approved and we are working on her purchase of a new home. Those are the success stories I love to be a part of.
The worst cases I see, and unfortunately the most frequent, are the families that can sell their home and make a profit - but instead they don't act until it is too late, and the Bank can, and will Foreclose. The Homeowner had hoped to stay in the home and did not want to move, but the Loan Modification was not approved, or they chose not to act, or acted too late and ultimately the home was sold. I see this happening primarily because it is a confusing, and embarrassing process for some. You get note taped on the door, and it seems like a scarlet letter, glaring for all of the neighborhood to see. This is devastating and you think the bank will come at any moment to repossess the house. That is not the case, however it is a common misconception and a rational fear. So lets take a look at the timeline of how a property goes from past due, into Foreclosure.
NOTICE OF DEFAULT. When a Homeowner falls 90 Days behind on their payments, the Bank will file a "Notice Of Default". The NOD, is informing the Homeowner they are in Default and the Foreclosure proceedings have officially started. This document is posted at the property, and is filed at the County where it becomes public record. There will be an amount provided on the Notice to bring the Mortgage current. If it is paid current, a Rescission of NOD will be filed. If it is not, the Foreclosure will continue. During this time, the Bank cannot take your home. It is in the redemption period and you are still the legal owner. This starts our clock, and we need to move quickly before the next, and costly Notice is filed.
NOTICE OF TRUSTEES SALE. At 120 Days past due, a Notice of Trustees sale can be filed. This is when it gets serious. It's to notify the Homeowner that an actual Auction Sale Date has been published, and if the home is not Sold by the Owner to another party, or brought current, the Home will be sold by the bank and will leave the Homeowner with out equity. The Banks do not always file this Notice. If you are working on a Loan Modification, they might hold off on filing this, but still file the NOD so you are still technically in Foreclosure. If you default on the terms of the Modification, instead of starting the process all over, they will just file a Notice of Trustees Sale and sell your home swiftly. Once a Trustees Sale is published, thousands of dollars in attorneys fees are added to the amount you owe. This is where most Homeowners simply fall behind and lose any hope on bringing their Mortgage current. They almost had the $5,000 to bring it current, now the fees are up to $10,000 and beyond redemption.
FORECLOSURE AUCTION. The home will be up for Public Auction. The Bank can publish a bid amount and sell to the highest bidder, or can foreclose and take ownership of the home. If the home is foreclosed by a 3rd party, they will provide you with a notice to vacate, and if you do not vacate they will proceed with an eviction. If the bank takes the home back they will have a Realtor or Asset Manager contact you on timeframe for vacating the home.
The best thing you can do is be proactive. If you are falling behind on your payments, contact your Mortgage Company to arrange a Loan Modification. Every bank is different with their guidelines, however all have Modification plans available if you qualify. Most will need to have a letter from you describing your hardship. www.Keepyourhomecalifornia.com is a great resource also. If you are in a position that even a Loan Modification will not help, contact a Realtor to put your home on the market asap. Often times I am contacted in the 11th hour from clients exhausting all efforts, then looking to sell. It is better to contact the Realtor and let him or her know you are considering a Sale as the last resort. We can postpone an Auction Sale date if we are given enough notice. Banks are cooperative once a Realtor is involved, provided all necessary paperwork is provided.
There is a lot of Pride that comes with being a Homeowner and accomplishing the "American Dream", which is why it can be so devastating to lose a home. You are not alone. I have seen many success stories of families who have had unfortunate life situations happen and lose their homes but come back into home ownership just a few short years later. It is possible, just be proactive.
Please visit http://www.trinitystockton.com/#!contact-stockton-real-estate-agents/con8 to set up an appointment for a phone consultation regarding your situation.
