Simple Foreclosure Numbers

[Johnny Duke]

I imagine anyone that reads the title will think "no such thing", but what I'm looking for is just a very boiled down summary of the numbers involved in a typical foreclosure process.

For simplicity, assume a home is purchased for $100,000. Owner puts down $20,000. Bank Loans $80,000. Five years go by: Owner has $30,000 in home equity, but lost job, missed the last 3 months of payment and is now in pre-forclosure with no hope to get back on track. 

What is the bank looking to recover in foreclosure? 

1. Are they going after the $70,000 left on the loan + any missed payments and fees? 

2. Or are they going after interest that SHOULD have been generated on the loan? 

3. If the property value has increased, are they after the $70,000 loan + fees + market value ?

And what about Owner? If she/he sells the property they can avoid foreclosure and avoid the credit hit (and maybe turn a profit), but what if they try to (or have to) ride it out, and the home is foreclosed on them: 

1. Do they get the equity that they put in, minus fees? 

2. Besides the initial missed P&I payments , do they tack on even more fees because they went all the way through the foreclosure process?

3. As investors, how much are we helping them in the end if we can work a deal to prevent foreclosure?

I know there are a lot of moving parts in the foreclosure process so it's difficult to speak on such general terms, but I appreciate any feedback!

- Johnny

[Wayne Brooks]

Being only 3 mo.s behind the additional fees will be minimal. But, the bank is only entitled to the principle balance plus these fees. Interest that would have been collected over the next 20 years is irrelevant, it hasn’t been earned yet.