The Foreclosure Process [Archive] - Magic Bullets Family Forums

Just Information

02-14-2005, 07:49 PM

The basics of process

In a Mortgage state:

The mortgage is used as the security instrument.
The owner borrows money from a lender.
The property is then used as collateral for the loan.
The owner holds the deed.
In the event the owner becomes delinquent in making the monthly payments, the lender must file a notice of suit to begin the foreclosure action.

The owner has every opportunity to bring the loan up to date.

If the owner does not make the loan current, a Court of Law can rule in favor of the Lender. Then a time is set for the property to be auctioned.

Typically this is referred to as a Sheriff’s sale.

Lawsuits are a matter of public record and available to everyone.

Foreclosures are filed with the Circuit Court Clerk. They can be tracked by using the case number to locate and review the file. Once you have reviewed several files, it becomes easier.

Deeds, mortgage information, and similar documents can also be found in the Land Records Office. Within these files you can determine if there are any liens, judgments or other encumbrances recorded against the property.

In a Deed of Trust state:

The Deed of Trust is the security instrument in a Deed of Trust state.

These are the parties involved: the Owner, the Lender or beneficiary, and the Trustee (usually an attorney). The property’s title remains the possession of the Trustee.

If the owner becomes delinquent, the Trustee is notified by the Lender and must record a Notice of Default at the courthouse.

This varies by state. Some may not require the filing of a Notice of Default.

This is a Nonjudicial method, thus no lawsuit needs to be filed. After the mandated period of public notice, the property may be auctioned.

Public notice is normally required in both the Mortgage and Deed of Trust state.

In the United States there are approximately 12 ways to foreclose on a real estate property. Each state has its own procedure and method of execution. They fall into the following major groups:

Trust Deed Lien and Power of Sale
Trust Mortgage Title and Power of Sale
Mortgage Lien and Judicial
Mortgage Lien and Power of Sale
Trust Deed Intermediate and Power of Sale
Mortgage Intermediate and Power of Sale
Mortgage Intermediate and Judicial
Mortgage Intermediate Strict Foreclosure
Security Deed and Power of Sale
Mortgage Title Entry and Possession
Trust Deed Lien Judicial
Mortgage Title Judicial

Each state has a specific system – a step by step process for the lender and the owner to follow in the foreclosure process.

It is a good idea to understand the specifics of your state’s process and the minor nuances.

Just Information

02-14-2005, 07:58 PM

Understanding Foreclosures
Reasons for Foreclosure
Foreclosure Empathy
The Foreclosure Process
Why all the build up, If you as an investor understand the process you will be able to help more people! Foreclosure is tuff on folks it's all about loosing! Your customer's loose their home and the lender loses money! If you can get your focus going in the right direction, you can create a Win - Win scenario for all involved.

Writer and philosopher Johann Wolfgang von Goethe said, "Kindness is the golden chain by which society is bound together.

You need to act fast as an investor when dealing with people in foreclosure and one of the most difficult areas of this process is getting the property owner to act. The longer they wait to act, the less time you will have. When people face financial distress they feel powerless and confused, many in foreclosure spend too much precious time denying their predicament until the last minute when only the most extreme of remedies remain available.

Keep in mind that you will need to avoid to long of a foreclosure delay as the cost will mount up and may just drive you out of profit range. It is vital that you help your customer to respond to any legal notice or document and assemble a delay strategy(s) immediately. Many property owners facing foreclosure end up declaring bankruptcy as a solution to their foreclosure problem because:

They see no way out
They are unaware of options
Bankruptcy Attorneys solicit them when the foreclosure is posted
Investors do not display empathy
Many believe that bankruptcy will stop their foreclosure and everything will be ok. Many attorneys do not tell property owners that bankruptcy will only drive up the foreclosure cost. Simply put foreclosure solutions are not well understood.

Over ninety percent of bankruptcy attorneys don't handle alternative workout programs.

Therefore, even though the attorneys may come across as knowledgeable and educated, their final advice on how to save a home is to tell people to declare bankruptcy.

Bankruptcy can be the right solution for some homeowners who are trying to save their home. However, it is far from the number one choice. In fact, it should be the last resort. In talking to a bankruptcy attorney, one is led to believe that bankruptcy is the best and only choice.

Your major strategy as an investor is "buying time".

If your customer goes straight to bankruptcy, all other options that could have bought time have been bypassed and are no longer available. Having done that, if there are any problems making the Chapter 13 payments, there are very few options left. In addition, it may have been possible to have gotten a work out solution approved instead that solved the situation without bankruptcy. This would also be a much better solution as far as saving credit. Most people don't realize how damaging a bankruptcy or foreclosure is to their credit until it's too late. It is something that can follow a person for a very long time.

You will find that in most cases, people will contact you at what I call the too late stage, because their back is up against a wall and the auction is the next day or even the same day. In these cases, you as an investor have the option to bring the loan current and take control of the property or assist your customer in filing a bankruptcy to stop the sale. This is done only to buy time, and the homeowner doesn't actually follow through with their court appointments and filings and lets the bankruptcy "fall off calendar" (it never actually goes through).

Many of your customers will be in denial that they are about to loose their home, they will tell you it's all worked out, they are not in foreclosure, they did not know and the list goes on.

At I have stated most do know they are facing foreclosure! It's your job to get them to face the facts and how you can help them as an investor.

Now how do you deal with them, how to approach them and how to talk to them during this most difficult time.

We will walk through this process and provide you some great tips!

My first step in the communication process is to send a letter to let them know I'm available to help.

Dear (Insert Customer Name),

I noticed in the public record of (Insert County Name) County, that a foreclosure action has been filed against your property at (Insert address) in (Insert city) and you may not be aware of this. If this is the case, I urge you to contact your lender, to clear this issue promptly. Your property is at risk.

Perhaps I can help; I am a serious real estate investor with experience in the foreclosure process, methods to protect your credit and ways to avoid foreclosure.

If I may be of service in this matter, it would be my pleasure to do so. You may contact me at (Insert Telephone number). I look forward to your reply.

I handle all the paperwork and pay all closing cost.

You get a quick response with no hassles, no pressure, and your worries will be behind you if we work together.

Don't wait until it's too late! You deserve a fresh start! We can keep the foreclosure off your credit records.

CALL ME TODAY to find out how I can help.

Sincerely,

(Insert your name)

(Insert Telephone number)

I try to follow up with a telephone call or a personal visit within 5 days of sending the above letter.

Contact the Homeowner

This is easier said then done.

The homeowner is probably being bombarded with letters, calls from attorneys and bill collectors, and has creditors showing up at his door.

The only way to contact the homeowner is by telephone, mail or in person, and chances are you will have a difficult time getting in touch with him.

Start with mailings. Indicate in your letter that you are a private investor looking for property in that part of town.

Let the property owner know that you may be able to help him with his financial problems.

Demonstrating an understanding, the homeowner's dilemma will help your efforts.

Indicate in your letter that you may be able to stop the foreclosure, save his credit rating and provide cash for use in paying his bills and/or for relocating.

Be professional and gracious in your correspondence.

Invite the homeowner to call you at his convenience.

If you don't hear from him in a reasonable amount of time, say three or four weeks, follow up with another letter, perhaps worded a bit more urgently.

As you get closer to the auction date, you may want to send two or more letters per month.

Follow up with telephone calls if you can. Be courteous, never pushy. Never interview the owner on the telephone.

Merely state that in order to determine whether you can help him, you will need to meet with him at the property.

Make sure he understands that the meeting will be more productive and less time consuming if he will have the loan, mortgage and insurance documents available, as well as the foreclosure notices.

If you are going to make an offer on the property, you must have the loan, ownership, and debt or lien information.

You must also assess the condition of the property and the property owner.

Combined with the market value and the default amount, you have all the ingredients necessary to formulate your offer.

If you feel comfortable with it, you can visit the property in person.

You may be confronted by an angry homeowner.

Be polite and leave if you are asked to.

Never, under any circumstance, snoop around, inspect or generally trespass unlawfully on somebody's property.

Telephone Script

Hello, my name is (insert name) and I was just following up with you on a letter that I sent a few days ago to see if I may be of help with your current property problem?

If they tell you no - let them know if they ever need help just give you a call.

If they say yes - you will need the following information - I would suggest asking them if you could ask a few questions or better yet ask them when would be a good time to meet with them.

Meeting the Homeowner

Use common sense and dress appropriately, something casual but not sloppy. Do not drive up in an expensive vehicle, as the homeowner will see you just like they see the lender as the bad guy!

Be sympathetic.

Does the homeowner need cash?
Is he waiting for a bailout?
Will he go bankrupt?
Find out the facts.

Review the loan and mortgage documents.
Verify the loan amount, monthly payments, interest rates, taxes, etc.
Review the insurance policies as well.
Get all the pertinent information you can.
Ask the owner if there are any other liens or judgments he may be aware of.
Inspect the property with the homeowner.

Never comment on the owners lifestyle, just the physical condition of the property.

Point out the obvious defects or items in need of major repair.

Use an inspection checklist and record your information and estimated costs of repair.

Make no promises at this point.
Make no offer or give the homeowner any money.
Make an appointment to meet with him again if you think you want the property.