FAQs on Purchasing Homes in Foreclosure

By adminOn 08-31-2010
FAQs on Purchasing Homes in Foreclosure

What is the difference between foreclosure and preforeclosure?

A preforeclosure is when you purchase the home directly from the homeowner after the bank has started the foreclosure process. It involves taking over the owner’s mortgage, which can include making the missed payments. The ‘preforeclosure stage’ is referred to the period when a Notice of Default (also referred to as Lis Pendens) is issued until the time the lender puts the property up for auction (This time period is a few months).   A foreclosure is the stage when there is a Judgment to Foreclose entered against the defendant.  In the Judgment documents are specified the balance due to the Plaintiff and the redemption date. Usually a week or two after the redemption date an auction sale is scheduled.

I am thinking of buying or investing in a foreclosed home. Where do I start?

First, research preforeclosure and properties scheduled for foreclosure sales for listings under Foreclosure Notices, Auction Sales or Sheriff's Sales. ILFLS is a tool that will allow you to investigate these areas. Once you find a house of interest, you can contact the trustee, the person or party who is filing the paperwork to initiate and carry out foreclosure proceedings on a property. Often times, this person is the attorney. It is also possible to contact the homeowner through a letter or phone call. 

How long does the foreclosure process take?

On average, the foreclosure process takes anywhere from five to nine months to complete. This time period is from the time the property owner stops making mortgage payments to the time of foreclosure. Once notified with the Notice of Default, the property owner has 35 days to “cure the default” (bring payments up to date).

When the payments are not brought up to date, the mortgage lender proceeds with filing for Motion For Judgment to Foreclose. If the motion is approved by the judge then a Judgment for Foreclosure is issued with. After expiration of the redemption period a Auction Sale is scheduled. If the home is not sold at the auction, the title is transferred to the bank and the property is officially “foreclosed”.

What does it mean if foreclosed home that I am interested in has a lien against it?

A lien is a legal claim against a property. Often times when a homeowner has lapsed on their house payments, they are lapsing monetarily on other things (credit cards, taxes, etc). Doing a title search can uncover any liens. ILFLS provides all information taken directly from courthouse documents on the existing liens on the homes that are being advertised.  In order to own foreclosed home, all primary liens must be paid.

 

Cristina Sivak