What Is Pre-Foreclosure

A Pre-Foreclosure is the act of placing your property on the market before you are formally declared in default. The buyer usually files for foreclosure when they can’t reach the borrower to modify their loan or they believe there is no hope for making payments on time. If you are just starting out or just need to borrow some extra cash, this article will teach you how to avoid becoming a pre-foreclosure victim.

Pre-Foreclosures allow investors to purchase property at a discount and rent it out instead of trying to sell it back at full value. If the investor wants to eventually sell the property, they may need to repurchase it at full price. This is known as a “Second Chance” because the property owner has their first chance to make payments on time.

The Federal Government will buy back your home if you are in dangerous conditions, you are behind on your mortgage payments, or the lender is collecting much more than where you paid for it. Even if you pay less than the original value of the home, if it has lost money due to depreciation or there are other financial conditions that make it unsafe or undesirable for potential buyers, the bank will offer you an option to replace your home with federal money.
Anyway With Pre-Foreclosure Attorneys & Lenders…
Foreclosure is a last resort. The bank must first try and negotiate with you to pay what you owe and get your house back.

If negotiations fail, the bank can legally take your home through a process called foreclosure. Most banks go through the court system and file their documents in a public proceeding for anyone to see. Even though most people assume that the only way to get back into your home is to pay all of the money that you owe on it, it is rarely this simple. As stated by the Federal Reserve, 66% of all foreclosures involve installment sales with some form of deferred payments. These types of sales require more paperwork than just paying off a loan in full. In fact, the bank must file a public notice that you are in danger of losing your property. There is a legal process that dictates how this public proceeding goes. Learn more from Pre-Foreclosure Attorneys at this website.

In California, the property is usually sold at auction. The property is “sold” to the highest bidder for a predetermined price. The bank charges a certain amount of money as a fee because they have to pay for the auctioneer and other associated costs. If you pay all of your mortgage payments on time and continue to make them after the sale date then you can buy your home back from whoever purchased it at auction. Learn more from our Foreclosure Artice.

Pre-Foreclosures are especially effective because you can purchase at a respectable price point. The property should be at least 20% less than fair market value if you want to keep up with the latest pre-foreclosure trends. This method is widely used by investors who buy properties for cash. Sometimes, however, they will use an installment plan so they can get paid over time instead of all at once. The bank usually charges them a fee to take back their loan property, which is typically around 6% of the original amount that the buyer owes the bank.