In a state with a judiciary legal system, the beginning of foreclosure is marked with the filing of the case, while in a non-judiciary legal system, the beginning of foreclosure is marked with the filing of the Notice of Default and/or the Notice of Trustee Sales. Both of these stages, to the foreclosure process, is known as the time of pre-foreclosure -when you can make the most cash from the transaction or case.
Ordering the TSG or Trustee Sale Guarantee -also known as the Trustee Report.
There must be a notice sent to every single person with interest in the property being foreclosed -As in anyone and everyone with a lien on the property, even a mechanic’s lien, or anyone with a second mortgage. This is to inform all parties concerned with the real property.
Subtitution of the Trustee -A non-judicial legal system always requires a Substitution of Trustee -rooted from the three-tiered approach to handling the case; the 3 main parties involved:
The Trustor, the one who borrowed the money, The Trustee who is a beneficiary, The Trustee, the one oversees the process
You may see a Substitution of Trustee posted at the County Recorder’s Office. This trustee only handles foreclosures and will follow the process to the end.
The Posting of Legal Notices -As required by law, as the affair concerns land and property, it should be made public through a legal notice. This notice contains only the information valid for public consumption; in other words, nothing that might be detrimental to the case or the parties involved. The notice appears on newspapers, publications, even special county-owned legal publications, and on the site of the property itself.
Maintaining constant contact -Constant contact should be maintained with the title company to ensure that no liens remain attached to the property being foreclosed. Bankruptcy can put a halt to the foreclosure, as bankruptcy is handled by federal law, superseding state law.
Prepare a credit bid: The beneficiary or mortgagee prepares a credit bid, which is the starting bid/amount at the auction, depending on the state and the state statutes.
In most states, the credit bid will include the principle balance plus all of the arrearages, including: Bank interest, Penalties, Legal fees
The bank interest, All penalties, And all legal fees. Included in this list are second mortgages, and even homeowner fees, if any. The lawyer prepares the credit bid -in a judicial legal system. In a non-judicial system however, the task is reserved for the Trustee.
Payment -this includes reinstating the loan. This is done by the owner of the property. Canceling or suspending the sale at anytime -Done by the mortgagee or beneficiary, but arrangements should be made with the owner beforehand.
The Notice of Trustee Sale. This contains the time and place of the auction. This should also contain the proper legal descriptions of the property -which can be obtained at the County Tax Assessor’s Office. Take care to be sure that the description matches the actual address; it should be up-to-date, as addresses change overtime.
Due-on-Sale Clause: A Due on Sale clause in a mortgage is a demand that the borrower pay off the loan in full, if the house is ever sold or transferred. The lender cannot prevent the sale, but can demand the payment in full of the loan balance, which often has the same practical effect.
In the absence of a Due on Sale clause, the loan is assumable without the lender’s consent. Older FHA and VA loans are assumable without the consent of the lender. How does this impact the sale of a foreclosed property? If you get a warranty deed from the owner at the time of the foreclosure sale or in the pre-foreclosure timeframe, as long as you keep making the payments, the bank will most likely be not be aware of the transfer. If you buy the property and then sell it immediately or even later on, you will be fulfilling that requirement of paying off the loan at that time.
@flacbe Welcome to Twitter, Becky! I want some lakefront property, but Alabama is a bit far away for me.