Bank's Role in the Foreclosure Process - PowerPoint PPT Presentation

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Bank's Role in the Foreclosure Process

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Title: Bank's Role in the Foreclosure Process


1
Banks Role in the Foreclosure Process
  • Understanding bank foreclosures and how to deal
    with mortgage institutions

2
Home Financing
  • Most homes and properties are obtained by
    borrowing money from a lending institution
  • The bank holds the deed to the property as
    collateral against payment in full
  • If mortgage payments fall into arrears, the bank
    can retrieve full ownership of the property
    through the foreclosure process

3
Reasons Homeowners Face Foreclosure
  • Increase in an adjustable interest rate
  • Excessive debt
  • Medical emergency, illness,
  • or death in the family

4
Reasons Homeowners Face Foreclosure
  • Job loss, reduction in work hours or pay, or
    unexpected promotion denial
  • Divorce and/or the loss of a second income
  • Unexpected major home repairs

5
Initiating the Foreclosure Process
  • A bank can begin the foreclosure process after
    only one delinquent payment
  • Most mortgage companies will present delinquent
    homeowners with several warnings before actually
    filing with the court in order to avoid
    foreclosures

6
Notice to Accelerate
  • After the payment is sixty days past due, a
    Notice to Accelerate will be issued by the bank
  • A date will be set to pay the delinquent balance
    and strong warnings will be made concerning
    actual foreclosure

7
Demand Letter
  • If payment is not made by the due date set in the
    Notice to Accelerate, the bank will hire an
    attorney who will issue a Demand Letter
  • This is the final warning from the bank to pay
    the amount due before a formal foreclosure
    request is presented to the court

8
Notice of Default
  • The homeowner does not respond to the Demand
    Letter, they will receive a Notice of Default
    stating a notice of foreclosure has been issued
    with the court
  • In most cases, the homeowner will have a month or
    less to respond to this judgment
  • This is the last chance to settle the delinquent
    amount before actual foreclosure

9
Notice of Sale
  • If the homeowner does not respond to the Notice
    of Default within 20 to 30 days, they will
    receive a Notice of Sale
  • This step normally occurs when payments are in
    arrears three or more months
  • A Notice of Sale provides the actual date whereby
    the property will be sold at a Sheriffs auction

10
Communication is Key
  • In order to avoid foreclosure, communication with
    the bank is essential
  • Open communication with the lending institution
    should begin as early as possible, even before
    missing the first payment
  • Most mortgage holders will work with homeowners
    who make an effort in order to avoid foreclosures

11
Reasons Why Lenders Do Not Want to Foreclose
  • Foreclosures become bank owned properties, or
    Real Estate Owned properties (REOs), making the
    bank responsible for repairs and upkeep until
    sold

12
Reasons Why Lenders Do Not Want to Foreclose
  • Banks are required to set in reserve an amount of
    money which is two times or more the value of
    each bank owned property
  • Shareholders could be displeased if required
    quarterly statements reveal too many defaulted
    loans and/or foreclosed homes

13
Options to Avoid Foreclosure
  • Negotiate a repayment plan, called forbearance
  • Negotiate an interest rate change or freeze,
    called note modification

14
Options to Avoid Foreclosure
  • With sufficient equity, an increased loan balance
    can be negotiated, called a refinance
  • If qualified, a government loan can be obtained
    to repay missed payments, called a partial claim

15
Options to Avoid Foreclosure
  • Consider selling the home if convinced further
    payments cannot be met
  • If there is no equity in the home, consider a
    short sale whereby the homeowner proves they are
    in a distressed financial situation and agrees to
    sell the home for less than what the property is
    worth
  • Consider bankruptcy

16
Lucrative Investments
  • Investing in bank owned homes can be a lucrative
    practice
  • Foreclosed homes can often be obtained for below
    appraised values and resold, for a substantial
    profit
  • Some banks are required to write off a set amount
    of losses each month, part of which can be losses
    realized through cheap sales of foreclosed
    properties

17
Foreclosure Opportunities for Investors
  • Seek out distressed homeowners and offer to
    negotiate short sales with their mortgage
    companies
  • Check bank foreclosure listings and government
    foreclosure listings for properties offered at
    reduced amounts

18
Understand Property Types and the Laws Governing
Them
  • Information on the types of distressed
    properties, such as pre-foreclosure, foreclosure
    and Real Estate Owned (REO), is critical
  • Understanding the various laws governing them
    from state to state is also critical

19
Trusted Source for Foreclosed Investment
Properties
  • Foreclosuredeals.com is a trusted and thorough
    source for information concerning bank
    foreclosures, property types and the laws
    pertaining to them in each state
  • Foreclosuredeals.com is also a bountiful source
    of bank and government foreclosure listings
    countrywide

20
For more Information
http//twitter.com/fcdeals http//www.foreclosure
deals.com/wp/feed/ http//www.linkedin.com/compan
y/foreclosure-deals http//www.facebook.com/Forec
losureDeals
http//www.foreclosuredeals.com/
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