Quicksand of Foreclosure: What to Do When You’re in Foreclosure

I am going to review some of the best techniques for buying and selling property as a real estate investor. The most popular technique today is the short sale and foreclosure market.

What is a short sale? – A sale of a house in which the proceeds do not reach what the owner still owes on the mortgage. Many lenders and banks will accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the homeowner is unable to make the mortgage payments. By agreeing to a short sale, the lender can avoid a lengthy and costly foreclosure, and the homeowner can pay off the loan for less than they owe.

The owner has several ways to get out of foreclosure.

1) Sell the house for what is owed. Very difficult to do due to credit problems with the borrower and tightening of lending practices.

2) Deed in Lieu: This is a way to escape from a mortgage that is too onerous. If a homeowner is unable to make mortgage payments and cannot find a buyer for the home, many lenders will accept ownership of the property in lieu of money owed on the mortgage. Even if the lender does not agree to accept the property, the owner can prepare a quitclaim deed that unilaterally transfers the property rights from the owner to the lender. Be careful doing this because the foreclosure will still show up on your credit report, even if the bank agreed to the deed instead of the deed.

3) Let the bank foreclose. It’s not the best, but sometimes people don’t have a choice, especially if they’re not good candidates for a short sale.

4) Work with a real estate agent or investor to do a short sale. Best option if home has some repairs needed and is at or below market value.

5) Make the payments and get the house out of foreclosure.

How many foreclosures are there in the US?

March 2007 US Foreclosure Market Report showed a total of 149,150 foreclosure filings, including default notices, auction notices, and bank repossessions. This is 47 percent more than a year ago.