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Foreclosure TermsIn order to talk about preventing foreclosure and pre-foreclosure, we need to first define some associated real estate foreclosure terms to make the subject easily understood.Pre-foreclosure
Pre-foreclosure is the period of time during the foreclosure process between when a lender files a foreclosure lawsuit or a
notice of default in the official public record and the date the property is scheduled to be sold at a public foreclosure auction or trustee's sale. Lis Pendens
After default, a lis pendens (legal notice) is filed against the property. The lis pendens will include the following:
Property Legal description Notice of foreclosure Attorney for the plaintiff Existing Loan
An Existing Loan is the mortgage or dead of trust, or loans that are recorded against a property's title to secure repayment of the loan. There is cetain knowledge required about an existing loan:
2. The 3 Covenants that pertain to loans in default 3. The assumption rules that pertain to conventional and
Mortgage versus Deed of Trust
Certain states are mortgage states, while other are deed of trust states. In a Mortgage: In a Deed of Trust: Foreclosure
Foreclosure is a legal process through which property, pledged as security for a debt, a mortgage, or dead of trust loan, is forclosed on by the lender, because the borrower defaulted by failing to meet the repayment terms contained in the loan agreement and promissory note. Types of Forclosure Action
2. Non-Judicial foreclosure Forclosure statues by state can be found at the following web site:
Select States foreclosure types (all mortgages)
State____Avg No of months_Foreclosure Type___Statue No
More Foreclosure Terms What types of Lenders exist?
unions, mortgage companies, mortgage bankers, commercial banks, pensions funds and insurance companies, are all licenced to make residential and commercial loans. 2. Private Lenders which include private people and In addition Loan Brokers are licenced to take loan applications from borrowers and arrange loans between borrowers and lenders for a fee, but cannot make loans directly to borrowers. Lenders are however licenced to make loans directly to the borrowers thru a mortgage or deed of trust. Further home loan terms for can be found in the following link: Additional Forclosure Terms definedType of Residential Loans
First, Second, Third Position Loans
The priority of First Position Loan, Second Position Loan and Third Position Loan is determined by the sequence of loan recording with the local government clerk. Liens
The most comon types are:
2. Second and third morgage or deed of trust liens 3. Judgment liens 4. Mechanics' liens (contractors and repairs) 5. Federal and state welfare, medical and child support
States require that subordinate lienholders are notified of foreclosure actions. State Lien laws vary, but the following factors should be reviewed:
2. How long judgment liens can be renewed for 3. Who can file a mechanic's lien 4. How long a mechanic's lean can be attached to titles 5. How long a mechanic's lien can be renewed for Most Federal, state and local government agencies will not discount tax liens. Federal tax liens may be at a higher priority than the First Mortgage Loan.
3 Loan Covenants to watch
borrower which usually translates to a due-on-sale clause. Due-on-sale clauses are sometimes absent from private loans or seller financed loans. 2. Borrow's right to reinstate after acceleration which 3. Acceleration remedies which translates to the fact that lenders have the right, upon default, to accelerate loan payments and demand that the unpaid loan balance be paid in full within 30 days of notice receipt.
Equity Skimming
Equity skimming is a pattern of conduct in which a buyer defrauds a property owner of his or her equity interest or other value in real property under the guise of a purchase of the owner's property, but which is in fact a device to convert the owner's equity interest or other value in real property to a buyer, who fails to make payments, diverts the equity or other value to the buyer's personal benefit, and leaves the property owner with a resulting financial loss or debt. Equity skimming is illegal in all 50 states and is covered by Federal and State Statues. Misc Loan Related Information incl Default, AssumptionLoan in Default
Most lenders consider a loan in default when loan payments are 91 days or more past due. Curing a loan is known as reinstating the loan. Loan Assumption
Conventional loans normally have a due-on-sale clause so the
opportunity to assume the loan without lender approval is not very viable. FHA loans prior to 12/14/89 can be assumed without qualification by paying an assumption fee or taken subject to without an assumption fee, but loans closed after 12/15/89
need a qualified owner-occupant and contain a due-on-sale clause which closes them to investors. DVA loans prior to 3/1/88 may be assumed by anyone without qualification by paying an assumption fee or taken subject to without an assumption fee. Loans closed after 3/1/88 have a due-on-sale clause requiring prior approval by the DVA or authorized agent before the loan can be assumed. Assuming an existing loan requires a legally responsible agreement with the lender for repayment of the loan. Buying subject to means taking over the loan payments without the personally liable responsibility for repayment of the promissory note.
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