How Does Foreclosure Work?
In Florida, foreclosures are judicial, which means the lender must file a lawsuit in state court. The lender initiates the foreclosure by filing a notice of default through the court and serving the borrower for a summons. Unlike most states, mortgage holders in the State of Florida have a right to file a notice of default after the first missed payment. The lengthy process will take a minimum of 6 months and in some cases 2 years or more.
How Do You Find Out If Your House In Pre-Foreclosure?
- Visit the County Assessors Website – For example here is a link to the Manatee County Assessors Office
- Visit The County Recorders Website – Here is an example of the Manatee Clerk-Recorders Office
- Inspect The Records In Person
- Read The Newspapers
Use these methods in rare cases where the lender has not sent you a notice of default in the mail.
What Are Your Options During This Process?
Pre-foreclosure is the state of a property that is in the early stages of being repossessed due to payments past due or the property owner being unable to pay the outstanding mortgage balance. The pre-foreclosure period lasts roughly 3-10 months during which arrangements are set up for the public auction and sale of the property. During this process, the property owner has a few options, one is selling the property to pay off outstanding debt before it is foreclosed on and sold at auction.
Homeowners who owe more than the value of the house will want to strongly consider a short sale. A short sale is the sale of real estate in which the net proceedings fall short of paying outstanding debt and liens. In this case, if the BPO (Brokers Price Opinion) deems that the lien holders should take less than the amount owed, then a sale of the property can be accomplished. The homeowner would reap the benefit of far less negative ramifications reflected on their credit score due to the short sale.
Although not all pre-foreclosures are short sales, if the process is still early on in the stages an interested party may purchase the home directly from the seller. In this case, the home would have less debt owed than the overall value.
Protect Your Credit
Traditional Sale Of A Pre-Foreclosure
One way to avoid foreclosure is the traditional sale of the said property with the help of a realtor. This may be a great fit if you are willing to pay a 6-7% commission, closing costs, and pay off all debtors/creditors/lien holders. The amount left if any after sale traditionally is the net proceedings that the homeowner is allowed to keep, often this is none or worse you have to pay out of pocket. On the upside, the homeowner will no longer own the house and have saved their credit from further damage.
If you decide to sell traditionally, contact your lender to notify them that you plan to list the property for sale with the intention of paying off the mortgage. Ask the lender to postpone the sale at auction to give you some time to find a buyer.
More Ways To Prevent The Process
The worst action you can take when falling behind on mortgage payments is to cut off communication with the lender.
Lenders will take action, find you, and begin the foreclosure process if you do not communicate with them. For the best possible outcome call your lender and explain your current financial situation to see if there is some way to prevent loss of the home. For some, the mortgage holder may extend the loan, add the back payments on to the monthly payment, and raise the interest rate. You will never what can be done in the situation if you do not ask.
- Restructure The Loan: Lenders may allow the restructuring of monthly payments and allow you to repay missed payments over time while also reducing the interest rate.
- Forbearance: To allow the borrower some time to sort out financial difficulties the lender will allow a period of time with suspended or reduced payments.
- Find Money: Sell off assets, jewelry, cars, clean out closets, and anything else you can think of to liquidate for the purpose of saving your house from foreclosure. Consider taking out a loan from a family member or friend to pay back lien holders.
- Save Money: Review your monthly budget, cut out all outgoing income that is not going towards the necessities. This requires a lifestyle change but if you really want to forbear future suffering it is best to make this switch now while you still can.
Selling To Florida’s Trusted Homebuyer
When selling a home to an investor at David Buys Houses we will be able to purchase your home in a few ways depending on the situation. More times than not sale of a home to an investor is the best course of action where both the seller and the buyer win.
- Cash Offer – Offer number one would be an all-cash offer which is the amount we can pay considering repairs and the amount owed on the property. This option is great because you get cash today, we pay all closing costs, there are no commissions or fees, and your credit will be saved. In cases where the foreclosure process has been ongoing, we are equipped to purchase homes through the method of short sale and save your credit from disrepair.
- “Subject To” – At David Buys Houses we will purchase your home “subject to” the existing finance. This means we make all of your back payments, pay all liens/fees, cover closing costs, charge no commissions, give you some cash, and pick up on the mortgage payments where you left off. This offer is a win-win all through and through for both the seller and the buyer. Our company can purchase homes subject to the existing financing even in cases where there is a due on sale clause. For more information contact a trusted homebuyer today.
- Lease Option – A lease with the option to buy is an offer where we will bring the mortgage payments current, give the seller x amount a month, sublease to a tenant we manage at x amount per month, and have an option to purchase the property after x amount of years. A seller will benefit from this agreement because we will save their credit, give them monthly cash, and continue making their mortgage payments.
All three of these offers depends on the situation and the circumstances, however, when possible we make all three offers and allow the seller to choose.