A.K.A Pre Foreclosure Sales
A pre foreclosure sale is simply a case in which the lender agrees to accept something less than the full amount of the payoff to avert foreclosure proceedings. Most lenders have figured out that it is cheaper to pursue some sort of a work out (short sale or other activity) rather than letting the property come back as an asset. Lenders are in the business of making loans, not selling real estate. U.S. foreclosure activity INCREASED 75% in 2007. California, Colorado, Ohio, Georgia, Arizona, illinois and Indiana al l posted Foreclosure rates among the nationís top 10 in 2007, and all these states documented more than 1 percent of their households entering some stage of foreclosure during the year.
To be successful throughout the pre foreclosure process, we will benefit greatly to follow this process:
1. You and I working together will get through the difficult process ahead. You, the seller will have a lot of responsibility for disclosing uncomfortable financial details and getting documentation completed and returned to me to submit to the lender. I will keep the lines of communication open. Let them know that even if the PFS situation is approved, the purchase contract may not be. Give them action steps and hold them accountable.
2. I will move fast, and start talking to the lender as soon as we identify thereís a problem. In the short sale world, speed and action is everything. Once you have signed the Authorization to Release Information and returned to me, I will call the lenderís Real Estate Loss Mitigation Department and ask for a Pre-Foreclosure application package. .
3.The pre foreclosure application will be returned to the lender as quickly as possible. Typically the property AND the seller have to be approved to halt the foreclosure process. A full BPO, and sometimes an appraisal, will have to accompany this package. The goal here is to buy time to put the foreclosure on hold and find a qualified buyer.
ē Net sale proceeds should be at least 87% of the appraised value (minus certain HUD approved costs);
ē The loan is at least two months delinquent at date of PFS closing;
ē You are able to sell and close within three to five months of the date of application for a PFS.
4. I will aggressively market the listing and keep the lender informed I will let the lender know what is being done to actively market the listing if we donít have an offer yet. Price feedback and copies of marketing material will be sent to the lender.
5. The proper forms will be used to present the purchase contract. I will get the purchase contract submission requirements and submit all documents properly. Keep in mind that this is a separate approval process and isnít a forgone conclusion. In this case, the lender acts as a seller would, approving or denying the deal. We must make it hard to pass up.
6. Lenders come up with a variety of issues so flexibility is critical.
Information deemed reliable, but accuracy is not guaranteed.