Short Sale Foreclosure Process

Different rules are followed by different states regarding the property sale which is in pre-foreclosure as well as regarding the short sale investing. However, each of these follows a fundamental process. This fundamental process begins with the property owner.

A homeowner purchases a home on loan from the bank. The bank gives loan depending upon the job, down payment and the credit record of the homeowner. The homeowner, after getting the loan has to make the payments regularly with interest. Such loans taken by the homeowner are for lifetime. It means that the homeowner will take almost a lifetime to make the complete payment with interest. Thus, the lender (bank) earns money from the interest associated with the loan.

However, if the homeowner fails to make the payments then the bank has the right to take hold of the property of the homeowner. Thus, property comes under the ownership of the bank. This is called foreclosure. The bank will start the short sale foreclosure process when the homeowner stops to make the mortgage payments. The bank may give the homeowner some time in order to start to make the payments again. It may give a period of three to four months before beginning the process of foreclosure.

This foreclosure process is a very prolonged process. It must be considered by the officers of loss mitigation work that property under the ownership of the bank is a non-performing asset. Mostly the banks would not prefer to take the house to foreclosure. However, the foreclosure process is initiated by the bank. The initial process in this is pre-foreclosure. The bank appoints a trustee when the pre-foreclosure process starts. This trustee then gets ready for the foreclosure process. Normally the trustee would be a local legal representative.

The foreclosure process is started by a lawsuit called Notice of Default. This lawsuit is filed by the bank with the help of the trustee. This lawsuit is filed in order to give warning to the homeowner that the property will be getting into the foreclosure process. The property is now under pre-foreclosure as far as the short sale investing is concerned. The trustee of the bank will make all possible and realistic attempts to come in contact with the homeowner.

They do so in order to make them know regarding the short sale foreclosure process that is coming. The trustee also workout with homeowner to help to bring the payment on track ones again. However, if the payment does not come on track within a period of three months then the trustee will file another lawsuit called Notice of Sale.

The trustee informs the homeowner regarding the court date and tells them to show up. However, most of the homeowner fails to do so. If the homeowner is able to show up then he may get few more months to workout on his payments. If the homeowner fails here, the property will be then taken to the Sheriff’s auction. This auction is also one of the parts of short sale foreclosure process. The persons who make the highest bid will get that property. However, if the property is not sold off at the auction, then the property becomes an REO property. Thus short sale foreclosure process is a very long process.

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