If you are in foreclosure, it is important to have a baseline understanding of how the foreclosure process works. The beginning of the foreclosure process is something called lis pendens. This is a document filed by the lender, typically a bank, which starts the foreclosure proceedings. In addition to it being filed, you should also be formally served this document. Before a lis pendent is filed, you will need to have missed your mortgage payments first.
It is typical that a bank waits at least 3 months after you have starting missing payments before filing a lis pendens. That being said, if you have missed one or two payments, you will likely have time to catch up your payments before your house falls officially into foreclosure. Once a lis pendens is filed, there will be a lot of paperwork and possible court hearings.
Ultimately, the process leads to a summary judgment and usually a public auction. In the meantime, fees will accrue. When a bank is foreclosing, they will usually hire an expensive law firm with lots of foreclosure files. Each time an attorney works on a document regarding your case, a bill is accrued. These bills will be added to your payoff amount when you try to catch up your loan or sell the house.
Meaning that if you owed $100,000, and the bank’s attorney charged the bank $3,000, then will will now owe $103,000. A typical summary judgment includes the final amount owed and it will usually have an auction date. Although the attorneys’ fees are added into this document, we have seen attorneys come back and add $2,000 in extra fees when attempting to pay off the mortgage before foreclosure. The moral of the story here is to address stopping the foreclosure as soon as possible. The longer your wait, the more it costs, and the harder it becomes.
The auction date is normally scheduled around 30-45 days after the summary judgment is filed. The auctions are done online and you will be able to see the auction schedule on the local county website. If you are in the middle of a foreclosure, it is absolutely possible to sell before auction. We have been successful many times in buying a house in the middle of the foreclosure process and even at the very tail-end.
The closing process is typically the same as for any of house, just with a few added difficulties. The title work will need to be elicited at a pace at which most title companies are not used to. A normal closing can take around 45 days. If you are in foreclosure, this may need to happen in as quick as a week. As a seller, you want to make sure your buyer and your title company understand and are capable of moving at the necessary pace in order to sell before the auction.
Part of the title work is going to be obtaining a new payoff from the lender. Lenders like to hand off all communications to an attorney, who in our experience, takes at least a week to get an official payoff to us. Many times, a payoff is only good for a day or sometimes it is expired by the time you receive it in the mail or by fax. When enlist the help of our own attorneys when this happens to ensure that nothing holds up the closing when selling your house.
When buyers are using bank financing or getting hard money loans, closing can also be delayed for weeks, just because of the financing. If you are coming up on your auction date, this is something that can put you at risk of losing your home before being able to sell. Before signing a contract with a buyer, verify they have the necessary funds to close in time.
One last peice to touch on is something called a short sale. In the event you owe more than your house is worth and it is under water, you will probably need to short sale your property. This is when a lender accepts less than is owed in order to allow you to sell your house. Although this has become very difficult nowadays, it is possible under the right circumstances. Having a buyer lined up and an experienced attorney helping you with your short sale makes it far more likely that you will be able to complete the short sale process.
We really hope that this has given you some useful insight into selling a house in foreclosure. When it is time to sell your house, give us a call to fill out the form on our website at ctiproerties.com. We would love to work with you.