So many questions have come in surrounding the foreclosure process.  Here we answer them as the process is explained.

Foreclosure can seem like a blurred mess of many steps, leaving many confused.  A lot of misinformation surrounding foreclosures don’t help things out either.  We advise people everyday, at all different levels of the process, and help them take advantage of the opportunities they have.  It is important and we find it brings comfort to those that face it with us.   

Delinquency

Payments not made by their due date are considered delinquent.  Delinquency will usually bring a notice in the mail along with phone calls and a late fee to be assessed.

Q - Can I be foreclosed on after missing one payment?

A – No.  Missing a payment is delinquency and is a matter between you and your lender only until you are in default.  From there foreclosure still can not happen until a few more steps are completed.

Default

A loan reaching 30 days of being late enters default.  A second notice is sent and the default impacts your credit score.

If in default for a week or two, a “demand” or “breach” letter will be sent.  This is a way of pointing out the terms on the mortgage have been violated. 

Q – What are my options once I’ve reached default?

A – First you need to sit down and assess your situation, like, deciding if you are able to continue making your payments.  From there it’s a matter of working to either take care of your payment to get back in good standing or starting to set yourself up for your future plans.  Contact us to go over your specific situation and options. 

Acceleration

At 60 days past due, the lender may initiate acceleration procedures.   This is a letter notifying that foreclosure is the next step.  The lender, at this point, will also only accept the total past due.  This includes all past and current payments along with late fees. 

Q – If acceleration procedures are initiated, can I no longer just try to pay the latest payment?

A – Once accelerated, the lender will refuse any partial payment and require only the total past due paid in full.  At this time they can even void any payment agreement and call the entire loan due in full.

Some time after acceleration begins, usually when a loan is 90 or more days past due, a local attorney of other firm will be hired to start foreclosure proceedings.  Formal notice of foreclosure will then be recorded at the local courthouse along with details of the debt published.  The attorney fees involved for this are added on to the amount due.

Q – Is there anything I should be aware of while being foreclosed?

A – Yes, Vacating the property by you and your possessions or having the property red tagged (unsafe to occupy) means you have abandoned the property and therefore opens the door to be repossessed. 

Sheriff Sale

The Sheriff Sale is the next step of foreclosure.  It is the auctioning off of the property.  An advertisement will be posted at the property and it will be advertised for 4 consecutive weeks, leading up to the auction.  From there, the highest bidder (usually the lender) obtains a Sheriffs Deed to the property. 

Q – Does the Sheriff Sale mean I’ve lost my house?

A – No. The property moves into redemption.  The Sheriffs Deed is destroyed if it is redeemed. 

Redemption

 After the Sheriff Sale is complete, the property goes in to the redemption period, during which time the property can be reacquired.  The redemption period in Michigan is usually 6 months unless the property has multiple acres which in that case it is a year.  There is also other special redemption periods for depts of less the 2/3, over 4 unit properties and/or abandonment.

To redeem a property, the owner must pay off the mortgage in full, all interest and late fees, court cost, attorney fees, title and appraisal fees.  If the sheriff deed holder paid any taxes or insurance after the sheriff sale, the mortgagor must pay those fees as well. 

Q – Is there anything I can do once I’ve reached redemption?

A – Yes.  This is an important time to set yourself up for the future.  Being in touch with a professional helps to clarify legit opportunities you may come across.  

Eviction

After redemption has expired, the next step is to evict.  This can be eviction of an occupant or personal property.  A notice will be posted and the occupant will be contacted by the local sheriff department to discuss a vacate date.

Q – I’m worried to find my stuff hulled out to the curb by surprise, can this happen?

A – Not really.  Attempts will be made to contact you.  It is important to communicate with them to make sure things go smoothly. 

Final Thoughts

Throughout this foreclosure process, there can be a lot of misleading, both of the intentional and unintentional variety.  One thing to take into consideration is that many different aspects are handled by specialist that may not be in communication with others involved.  This can be confusing when multiple people approach you, unaware of the actions of one another.  Having someone to go to, like us at Lansing Foreclosure, helps make sure everything stays on the up and up. 

What we have laid out here in our explanation of the process is what’s going to happen if nothing is done along the way.  There can be offers during this that may benefit you.  Make sure to look into them with a professional.  There could also be confusing information to make you believe something different could be happening.  Again, bring this to a professional like us to look over.

We understand this is a difficult process to go through and never fun.  However, we urge people to face this process and are happy to help throughout it in hopes to best prepare for your future plans.  The members of our community are important to us and one of the main reasons for Lansing Foreclosure was to provide a place of reliable answers and advice in just this area. 

Contact us anytime for more information or any additional questions you have.

At Lansing Foreclosure, we come across a lot of questions that we want to address in our Q&A post.  A special thanks our Facebook and Twitter followers for some of their inquiries. 

A high amount concentrated on the foreclosure process.  So much that we decided to address it in its own post later where we can break it down completely from start to finish.

Remember to contact us with any questions you have at info@LansingForeclosure.com.  We answer each and all directly.

Q - Does the amount owed before foreclosure have any effect over what it is marketed for?

A – Very popular question.  The short answer is no.  That number is thrown out the window by the time it’s listed.  Right now, in most cases, the bank is taking a loss no matter what.  So they look for the appropriate market value for a quick sale and evaluate offers to that alone. 

Q – How much can you “lowball” a foreclosed listing?

A – There are a few different answers to this.  When a bank owned property is listed, that list price needs to be acknowledged, even if you don’t agree.  Offering 50% of it isn’t going to be taken seriously.  Staying within, at most, 20% is where you’ll most likely gain a response.  A common meeting point would be around the 10% mark.  For example, a 100k listing would see high 80k’s to low 90k’s as a realistic target range to settle at.  Be advised though, if a property draws multiple offers and yours is far below, you risk being passed over entirely without consideration.  Being in an appropriate range with multiple offers will draw a highest-and-best situation, where the high bid wins. 

Over time, if it doesn’t sell, the list price will drop with the same formula applied to that number.  If it reaches its 3^rd and 4^th price drop, it is becoming obvious the presumed market value is off and a wider range will be considered, pending there is some evidence backing your offered price. 

For some of the extremely low priced properties, banks traditionally will not sell a property if the selling of it (commission, closing cost, etc.) cost more then what they are selling it for. 

Q – What do I need to put an offer in on a foreclosure?

A – For an offer in which you’ll be acquiring a mortgage, a pre-approval is needed to cover the amount offering.  For a cash deal, you will need some type of proof of funds.  This can be a bank statement printout.  Also, an earnest money check.  $1,000 is a typical minimum to put forth with an offer.  For cash deals, banks may at times require 10% as the earnest money amount.

Q – Is financing difficult on a foreclosure?

A – Not anymore difficult then for any other property.  In fact, there are at times some good deals for certain properties.  We have a strong list of lenders able to find the best available option for financing.   

Q – Are repairs taken into consideration on foreclosure listings?

A – Yes.  In many cases, we’ve seen people focused entirely on the list price alone and not to its conformity to the neighborhood.  What this does is deduct the presumed repairs from a list price already adjusted to represent that number.  The repair argument accompanies many offers we come across.  I’m sometimes amazed how many other agents get too caught up in this reasoning alone.  If it’s a big enough issue to fall far short of the list price, the bank is aware already. 

We show buyers how the as-is condition of the property fits in with its surrounding market first.  From that point, more effective issues can help negotiations that will be taken into more consideration.

Q – Is there an advantage in working with Lansing Foreclosure?

A – Absolutely.  The REO market is full of many different systems and processes that being an active REO specialist, like us, is almost a must when dealing with these properties effectively.  Lansing Foreclosure is not only a specialist in this area, we pride ourselves in being #1.  Our experience and knowledge is second to none and will leave you with the comfort that you will be represented as best you could.

Q – Can I find good deals online?

A – I’m glad this one came up, because there is a lot of people browsing the internet for deals.  And if you are one, you probably have come across the following statement a few times: “I’m Sorry, this property is no longer available.”  How did I know that?  Good deals go quick.  They go quicker than the information can get out.  Even sites that charge those annual and monthly fees to get the inside scoop on foreclosures are working with dated information.  I’ve had to break this news to too many people that I know were working hard to find something.

There is a better and cheaper way.  Contact us!  We are on the ground floor of what is available and have the resources available to make sure you find these properties quicker than anyone else…and its free.  We also make sure your interest in a property is presented in its best light.  Too often people miss out on opportunities because of the complicated nature of the REO market or false information.  Having Lansing Foreclosure working for you makes sure you are heard.

Q – Is the banks motivation for a property just to get rid of it?

A – This is the assumption made when seeing what foreclosed properties are listed and selling for.  If a bank is capable of making more, they would certainly try.  In some cases they have even invested money into their listing, with hopes of gaining value.  The as-is listing is usually most appealing to them as it gets the property on the market sooner.  The thing to remember is that the deficit of the loss they take on these properties, reflects their value.  Although they have the ability to adjust their properties to meet market value easier then the average homeowner, it doesn’t mean they take this loss lightly.

Thanks again for the questions and remember to contact us with anymore at info@LansingForeclosure.com.  

Recently I was listening to a local radio program where I heard an explanation why people are upside down on their mortgages.  This person pointed the finger directly at people walking away from their home, leaving the bank high and dry and made the quote “They knew what they were getting into when they signed on the line.”  I was surprised by this state of mind considering this was coming from someone who was directly involved with our market.  They claimed this act was an injustice, by these homeowners, on their neighbor. 

These same people having a finger pointed at them were probably told by that same person, that real estate is an appreciating investment and never would have foreseen the state of our market today when signing on said line.

The reality is, while some did see concerns about what could happen to the housing market, no one could have expected  the slide we’ve seen.  This was the result of a multitude of things happening and not that of one specific group.  While this doesn’t mean all those homeowner’s aren’t at all to blame, it certainly means they shouldn’t be the one taking the brunt of the guilt.

To understand where we are now starts with going back a couple years to when our market was in the best shape it has ever been.  Many were taking advantage of the push to make everyone in America a home owner.  This was accomplished with guaranteed financial backing to banks for more questionable or riskier loans. 

In many cases, those risks didn’t pay off and it was becoming evident that this idea to make everyone a homeowner, wasn’t working out.  People had stretched themselves too far, too soon.  But, they were encouraged to do so. 

As these began to pile up, our market started seeing the effect.  Prices fell with more and more bank owned properties in our market inventory.  This hit on the housing market made its mark on our economy.  Unemployment started to rise and the instability in the area sent things into a tailspin. 

The fusion of these loans gone bad into the economy meant that the once more stable homeowners were starting to feel the effects to.  The number of willing and able buyers fell and forced home prices down even further.  With such low prices, homeowners weren’t able to compete with those bank owned properties, meaning they were left upside down on  their home. 

So now, what are homeowners supposed to do?  A scramble of programs ensued to help in the form of loan modifications and short sales.  But, in many cases, these were a flop and didn’t do any favors.  Keeping people in their homes would be the best thing for our market, but, more and more people started to come to a realization that no one, with the ability, was going out of their way to help make that happen.

When homeowners can’t afford to stay in there home, they need to start working towards their future plans.  Something we work with them on regularly.  Claiming an injustice on their neighbors if they have to walk away isn’t right and that line of thought won’t do anything to help our community.