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					    Foreclosure




 By: Cristina Serra
Portillo Realty Corp.
              Foreclosure Outline

   I     What is a foreclosure?
   II    Types of foreclosures
   III   Foreclosure Process
   IV    How to avoid a foreclosure
   V     How to stop foreclosure
   VI    Statistics
   VII   Conclusion
I. What is a foreclosure?
 Foreclosure is a process where a property owner
 fails to make their mortgage payment, therefore
   creating a delinquent loan. Once the property
   becomes delinquent, the homeowner begins to
receive letters from the lender requesting payment
for the mortgage. If the homeowner does not make
  an effort to make any payments within 90 days,
   the lender will send them a notice in the mail
    stating that their home will be sold at public
                       auction.
       II. Types of foreclosures
    Each state has its own statutes and regulations governing foreclosure, although foreclosures in practically all
    states now follow the same basic formats. Nevertheless, there are different types of foreclosure formats:


   Foreclosure by sale The most common type of foreclosure is the foreclosure by court sale. Upon default, the
    lender files a suit for foreclosure . If the plaintiff lender (mortgagee) is successful, the court will order that the
    subject property be sold at a foreclosure sale.


   Power of sale foreclosure Some mortgage loans are secured with a deed of trust (sometimes called trust deed),
    instead of a regular mortgage. This is an important difference, as the deed of trust normally contains a "power of
    sale" provision, which allows the trustee to sell the property without having to file a suit or go to court.


   Deed in lieu of foreclosure Some borrowers in default may wish to avoid the entire foreclosure process
    altogether. Such borrowers may instead simply wish to surrender the property and move on with their lives as
    quickly as possible. A "deed in lieu of foreclosure" would then be used to convey the property from the borrower
    to the lender. In exchange, the lender will consider the loan paid in full.


   Tax foreclosures Two of the basic powers that government can wield are taxation and eminent domain. Taxation
    is the ability levy taxes on people and property. Eminent domain is the government's power to take property
    away from private ownership. A tax foreclosure combines those two powers.
           III. Foreclosure Process
    Foreclosure is a long and difficult process for both lender and borrower. Most foreclosures take at least six months, while many
    can take up to two years to complete. The typical foreclosure process normally goes as follows:

   Delinquency The foreclosure process normally begins with a delinquency, particularly of the required loan payments

   Default and acceleration The first true step in the foreclosure process is the notice of default. With that notice of default, the
    lender will demand that the lender cure the default within a specified period (usually 15 to 30 days).

   Foreclosure suit Most courts require the lender to attempt to negotiate a reinstatement with the borrower, before acceleration
    can be validly enforced. After the acceleration demand is issued, the lender must give the borrower additional time to satisfy
    the acceleration demand

   Judgment and sale The lender has no choice but to wait for the court to process the case. The eventual conclusion, unless the
    borrower is able to cure the default or defeat the suit, is usually a judgment for foreclosure

   Deficiency judgment Lenders will occasionally accept a lower-than-desired bid and take a loss. For example, if the judgment
    amount is $100,000, but the lender believes that it can only market the property for $75,000, they will accept a lower bid in
    that market price area. The lender will then go after the borrower for that shortfall, by obtaining a deficiency judgment.

   Statutory redemption period Many states have statutory redemption period, which give property owners the opportunity to
    redeem their properties after foreclosure. The winning bidder, whether it is the lender or a foreclosure real estate investor,
    must respect the borrower's statutory right of redemption. [Note that the borrower's equitable right of redemption expired with
    the foreclosure judgment and sale.]

   Real estate owned properties Mortgaged properties that revert back to the lender because of foreclosure (or deeds in lieu of
    foreclosure) are normally called REOs, or real estate owned properties. Mortgage lenders are not in the business of owning and
    managing real estate. They will try to sell them as soon as possible to convert that real estate into cash.

   Eviction The highest bidder (and thus winner) of the foreclosure auction must respect any statutory rights of redemption that
    the borrower may have. Once the redemption period expires, however, the new owner will move to evict the erstwhile
    borrower.
                          IV. How to avoid a foreclosure


                                                                                              Partial Claim.
                                            Mortgage Modification.               Your lender may be able to work with
        Special Forbearance.
                                          You may be able to refinance              you to obtain a one-time payment
Your lender may be able to Arrange
                                           the debt and/or extend the            from the FHA-Insurance fund to bring
    a repayment plan based on
                                          term of your mortgage loan.              your mortgage current. When your
    your financial situation and                                                  lender files a Partial Claim, the U.S.
                                           This may help you catch up
       may even provide for a                                                      Department of Housing and Urban
                                            by reducing the monthly
       temporary reduction or                                                    Development will pay your lender the
                                               payments to a more
   suspension of your payments                                                         amount necessary to bring
                                                 affordable level
                                                                                         your mortgage current



                                      Selling Your Home at market value
    Deed-in-lieu of foreclosure.          If catching up is not a possibility,
 As a last resort, you may be able           the lender may agree to put               Pre-foreclosure sale.
   to voluntarily "give back" your     foreclosure on hold, giving you some          This will allow you to avoid
 property to the lender. This won't   extra time to attempt to sell your home        foreclosure by selling your
     save your house, but it is         (family sale transaction is one of the      property for an amount less
     not as damaging to your               most common solutions and this          than the amount necessary to
  credit rating as a foreclosure.              will involved the transfer           pay off your mortgage loan.
                                             of deed and full pay off debt)
V. How to stop foreclosure
                Relief Against Foreclosure: Filing for Bankruptcy

 A bankruptcy filing is a drastic step, but sometimes it is necessary to forestall a
foreclosure. Homeowners in the midst of should not consider bankruptcy until all
other avenues have been exhausted and judgment seems inevitable. Don't file for
  bankruptcy if you're considering a refinance, as lenders prefer not to lend to
                     borrowers in the middle of bankruptcy.

Filing for bankruptcy can delay and/or suspend foreclosure procedures, but they
                         may not delay it permanently.

           There are two bankruptcy options available to consumers.

    A chapter-13 bankruptcy collects all of the consumer's assets and tries to
   restructure the consumer's debt payments. The mortgage is one of the debt
  payments, and the bankruptcy administrator will try to negotiate a workable
 payment plan with the mortgage lender that will forestall foreclosure and may
                            even reinstate the loan.

 A chapter-7 bankruptcy is more drastic. The bankruptcy judge or administrator
collects all of the person's available assets, liquidates them and uses the proceeds
  to pay off the creditors. Most if not all consumer debt balances are then wiped
      clean. Secured debts, such as car loans and mortgage loans, are treated
 differently; the lenders eventually are allowed to continue with their foreclosure
     or repossession efforts. Many states protect the person's home from such
 bankruptcy liquidation, but they will allow the mortgage lender to continue with
                   the foreclosure if the borrower is unable to pay.
                   VI. Statistics
                                 All across the country—in rural,
                                  suburban and inner city areas—
                                  more and more families are losing
                                  their homes
       REO
                                 According to statistics published by
foreclosures                      the Mortgage Bankers Association
                                  of America, foreclosure rates are at
                                  their highest level in 30 years. For
                                  the three months ending May 30,
Bankrupties                       lenders initiated 134,885 new
                                  mortgage foreclosures. That
                                  represented close to 4 of every
  Judgment                        1,000 mortgaged homes. The
  and sale                        number of conventional loans that
                                  have been foreclosed has increased
               0   50   100       45 percent, to 76,526, the highest
                                  level in 11 years.
      VII. Conclusion
        Most of all homes can be saved from foreclosure by
                      taking the proper action.

     The property owner should seek the advice of a professional
 foreclosure consultant as soon as possible. The faster the property
 owner asks for help, the more options there are available, and the
           homeowner will have a greater chance for success.
If is too late to solve the problem then they will have no other choice
                                but to sell.

Many people are starting up businesses these days on the back of the
foreclosure boom. The idea is to buy a foreclosure taking advantage
 of the below-market prices and either resell at market rates, or fix
the place up and sell it in its improved state at the new market rate.
                   Both are lucrative businesses.

				
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posted:5/17/2012
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