In Foreclosure Process : Does this mean the home will soon be an REO?
Posted by Tony Leocadio Admin on Wednesday, March 11th, 2009 at 7:39am."In Foreclosure Process, Notice of Default, Short Sale/Subj to Lender Approval"
The part that sticks out to me is that is says "In Foreclosure Process"... Does this mean it will soon be foreclosed and be listed as an REO and no longer a short sale? And what does the "Notice of Default" mean???
When a homeowner misses a payment (or payments), the lender CAN record a Notice of Default on the property. This would be the start of the 'in foreclosure process'. 3 months after the NOD, the lender CAN record a Notice of Trustees sale. This lets the homeowner know that a date has been set for the home to be auctioned off on the courthouse steps. These dates can be postponed.
So let's assume that the homeowner is in default on the loan and a Notice of Default has been recorded.
Let's also assume that the homeowner is trying to sell his home as a short sale. Any offer that the seller accepts is going to be subject to lender approval - as in the seller's lender that is owed the mortgage. The bank may come back and say 'your $300,000 offer won't work, our appraiser says it's worth $400,000'. At which point the buyer will probably not purchase the home.
The bank might have one person assigned to foreclose on the home and another person assigned to negotiate the short sale. They each have their own job.
It does happen that the home gets foreclosed on while people are trying to do a short sale. So a buyer that is waiting around for the short sale process may be disappointed that he does not get the home.
To finish the foreclosure proceedings, the home would go to Trustee's Sale. If no one purchases the home at the Trustees Sale, the bank would then own the home and will put the home back up for sale as an REO.
If someone purchases the home at the trustees sale - which has to be all cash (casheir's checks) - they may try to flip the home for a resale, but probably won't call it a bank repo or REO. There is a three month waiting period for the new owner to sell the home to a buyer using an FHA loan.
So let's assume that the homeowner is in default on the loan and a Notice of Default has been recorded.
Let's also assume that the homeowner is trying to sell his home as a short sale. Any offer that the seller accepts is going to be subject to lender approval - as in the seller's lender that is owed the mortgage. The bank may come back and say 'your $300,000 offer won't work, our appraiser says it's worth $400,000'. At which point the buyer will probably not purchase the home.
The bank might have one person assigned to foreclose on the home and another person assigned to negotiate the short sale. They each have their own job.
It does happen that the home gets foreclosed on while people are trying to do a short sale. So a buyer that is waiting around for the short sale process may be disappointed that he does not get the home.
To finish the foreclosure proceedings, the home would go to Trustee's Sale. If no one purchases the home at the Trustees Sale, the bank would then own the home and will put the home back up for sale as an REO.
If someone purchases the home at the trustees sale - which has to be all cash (casheir's checks) - they may try to flip the home for a resale, but probably won't call it a bank repo or REO. There is a three month waiting period for the new owner to sell the home to a buyer using an FHA loan.
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