So you think you want a foreclosure...
I meet folks every day that say they keep hearing about these great foreclosure deals. And they want in on a GOOD THING! But they don't know where to start. They heard about their neighbor's brother-in-law that practically stole a mansion off the courthouse steps. Then their mother is complaining about the house next door that has been left vacant with the front door wide open and tall grass. And then there is that third cousin who lost his house because his interest rate went form 6% to 12% overnight. What gives? With a Conventional Lender the foreclosure cycle goes like this:
The homeowner gets 30 to 60 days behind in mortgage payments. The bank sends an official notice that foreclosure is pending.
- Owner catches up OR Bank begins foreclosure process
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While in this period, it is possible to have a short sale. This term is used when the mortgage lender agrees to take less than the loan payoff in an effort to prevent the time and expense of the foreclosure process. Short Sales are very complicated and will be addressed in more detail later.
The mortgage company hires a real estate attorney to begin the foreclosure process. In Georgia, the lender is required to post notice for 4 weeks prior to a sale. You will find these notices in the legal "organ" for the county; there is only one newspaper per county.
- Sale 1st Tuesday of each month on the courthouse steps
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On the first Tuesday of every month, in every single county, there is a sale on the courthouse steps. A representative of the attorney "calls" the properties, giving the property location and owner's name and lender's name. They will open with a beginning bid set by and given on behalf of the bank (one assumes this to be the loan balance). Anyone interested can begin bidding higher. Buyer Beware! The successful bidder is required to pay cash for the entire bid immediately. All sales are final. There may be 2
ndmortgages, tax liens, mechanics liens or more attached to the property. The new owner may be responsible for these liens. You need some serious coin to buy on the courthouse steps, and you better know what you are doing. This is not for the novice investor or first-time home buyer.
- Bank is highest bidder, takes back house
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- Bank hires RE Company to market home
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If the bank is the only bidder, then it takes ownership of the home. The bank hires a Real Estate Company to market the property. The bank may or may not make repairs. The property is listed in the Multiple Listing Service (MLS), a sign is in the yard, and any Realtor can show you the property. These can be really good deals, and home buyers can have equity in the home from the beginning.
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