With all the news regarding sub prime lending and an ever increasing number of forclosures and auctions, it’s good to understand what foreclosures are, the reality of buying a home in the South Bay, and how to go about trying to accomplish it. Please read through our foreclosure information pages to get some valuable information.
What is a Foreclosure?
Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner’s failure to comply with an agreement between the lender and borrower called a “mortgage” or “deed of trust”. Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, it is typically said that “the lender has foreclosed its mortgage or lien.”
The process of foreclosure is lengthy and the timeframes for when the lending institution begins the process vary from state to state. Other factors, such as the increasing availability of personal loans for owners facing foreclosure, present homeowners with foreclosure avoidance options. Websites which connect individual borrowers and homeowners to individual lenders are increasingly used as mechanisms to bypass banks while meeting payment obligations for mortgage providers. The increase in the number of foreclosures in the United States has led to more loan listings which are designed to forestall or prevent foreclosure.
- North Redondo Foreclosures
- South Redondo Foreclosures
- Hermosa Beach Foreclosures
- Manhattan Beach Foreclosures
- Torrance Foreclosures
Types of Foreclosure Opportunities
A Short Sale is the sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Another way to say it is that the property is worth less than what it will cost to sell (paying off all existing liens and closing costs). This is commonly referred to being “upside down.” In order for a short sale to close, the lender must agree to accept less than the outstanding loan balance as full payment.
Pre-Foreclosure: Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with the equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts well below market value. As the number of foreclosures go up and the number of buyers and realtors pursuing pre-foreclosure goes up, this gets to be more difficult.
How to buy via public auction
Bank-Owned (a.k.a. REO): If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually re-sell the property to recover the unpaid loan amount. The lender will typically clear the title and perform needed maintenance and repair; however, the discount for these REO homes is typically less than a pre-foreclosure or auction property discount.