Over the past few years national foreclosure statistics have been on the rise. Whether reading the newspaper, watching the news, or surfing the internet, the number of foreclosures and short sales continue to make headlines. These trends are evident in the Gloucester county real estate market. Although foreclosure numbers are growing at a slower pace in 2008, foreclosures are still having a strong impact on our Gloucester county real estate market. Realtytrac.com is reporting that one in every 615 New Jersey households have been involved in foreclosure filings, which is up 11.8% from February 2007.
As a prospective buyer or seller of Gloucester County real estate it's very important that you understand basic foreclosure terminology. Here's a quick list of terminology. Please feel free to contact me if you're faced with either buying or selling a Gloucester County foreclosed property. I'd love to help.
Judicial Foreclosure - Judicial foreclosures are those which require the lender to take the borrower to court in order to foreclose on the property in default.
Non-Judicial Foreclosure - Non-Judicial Foreclosures are those in which the mortgage deed contains a power of sales clause allowing lenders to foreclose on a property outside of the court system.
Foreclosure - the legal proceedings initiated by a creditor to repossess the collateral for loan that is in default.
Forbearance - forbearance is a lender's postponement of foreclosure in order to give the borrower time to catch up on late mortgage payments.
Right of Redemption - right of redemption is the right of a homeowner to avoid foreclosure by paying off the amount due the lender on the mortgage.
Foreclosure Auction - when a bank auctions a repossessed property they will typically set the starting price as the remaining balance on the mortgage loan. Many times, however, in a weak market the bank will set the starting price at a lower amount if it believes the real estate securing the loan is worth less than the loan.
REO (real estate owned) - when the remaining mortgage balance is higher than the actual home value, known as an Upside-down mortgage, the bank is unlikely to attract auction bids at this price level. A house that went through foreclosure auction and failed to attract any bids becomes property of the bank. The bank will typically try to sell it at a loss later through standard channels.