WHAT IS A PRE-FORECLOSURE?

Bottom line is rarely will you see a home called a pre-foreclosure ever sell.

Here’s what happens:  Owners of a home stop paying their mortgage.  The bank is required by law to file a Notice of Default (NOD) after the owner becomes 90 days late on their mortgage.   When that is filed, websites announce the property online as a “pre-foreclosure”.

This is not a home that is for sale.  It’s just a property with an owner who is behind with their mortgage payments.  The owners obviously know their situation.  Next potential investors, home buyers, and real estate professionals reach out to the owner to inquire about helping them and/or purchasing their home.

What usually happens next is the owner(s) find a way to catch up on their payments, and life goes on.  Websites may keep the property on their site as a pre-foreclosure for months and even years later.  This creates a lot of buzz online about a property online that is not for sale.

Sometimes after the pre-foreclosure property receives the Notice of Default, the payments are continually skipped. Once the bank payments fall 6 months delinquent, the bank files a Notice of Trust Sale (NOT).   Thereafter, the bank hires a servicer to proceed with the foreclosure process.  The last step of this process is to schedule and complete an auction at the County steps. Here anyone with cash in hand can purchase this property, sight unseen and as-is.  Should no one offer to buy the property, the bank takes over the property.  The bank may keep and hold the property indefinitely or eventually hire an assigned broker to list and sell the property.  Should that happen, the property will go on the MLS as an active property for sale, subject to all bank terms.

 

About the Author
Throughout his 15-year real estate career, Ian Rusnell has earned admiration and respect from clients and industry professionals alike for his dedicated service, trustworthiness, and results. He & the RE/MAX brand are part of a company with a powerful local and international presence, as well as a reputation for always putting clients first. Ian, who first made a name for himself in Playa del Rey, has since become a recognized agent throughout the South Bay and Silicon Beach.