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Steps Of Foreclosure
Saturday, July 10, 2010
Although foreclosure allows the lender to claim title and force sale ofthe property based on loan default, there are foreclosure steps which must befollowed
Default Notice requires the lender to inform the property owner by letterstating foreclosure is pending and must include the number of payments inarrears and balance owed. There is no requirement that this letter be sent beregistered or certified mail.
The only option the borrower has at this point is to contact the lender in anattempt to bring the loan into current status. Unless being removed from layoffis imminent for the property owner, or the area real estate market is slow, stepsof foreclosure will not of interest.
Acceleration Notice is required by law in most states. This documentation mustclearly advise of mortgage termination and must offer a 30-day grace period forthe total balance to be repaid. This communication may or may not includenotice of intended legal action. While this notice may be sent by regular mail,in most cases it will be in the lender's interest to obtain signed proof ofreceipt of the letter.
Short Sale is an option lenders may use for steps of foreclosure. In thisprocess, with the knowledge and consent of the lender, an investor or realtormay approach the lender offering to purchase the property. This offer willusually be very low or a rock-bottom figure but is of benefit to the lender andthe investor since the property will not be exposed as a 'foreclosure'; therebyallowing the investor to profit from the resale and the lender not to incuradditional expense.
Public Auction takes place on the courthouse steps of the town or county inwhich the property is located. The opening bid and bidding increments are atthe lender's discretion with the opening bid usually set very low. The lenderknows that if no bid occurs, the property title automatically reverts to him,and that the borrower now owes auction and attorney fees in addition to thebalance.