When a property is in pre-foreclosure, it is on the path for repossession by a mortgage company or lender, but the actual legal proceeding has not occurred yet. A home falls into pre-foreclosure when the homeowner is unable to keep up with mortgage payments. Depending on your lender, you might find yourself at this point in the foreclosure process after one missed payment or after several mortgage payments do not make their way to the bank.
The first step of a pre-foreclosure is when the lender files a default notice. This lets the homeowner know that the bank is going to pursue legal action in order to collect whatever past due payments are owed, or foreclose on the home. While in the pre-foreclosure point of the process, the homeowner has several options. Catching up on the outstanding mortgage payments is the most desirable option for all parties. The homeowner can also put the home on the market, and try to sell it before the bank moves forward with the foreclosure process. Hopefully, the homeowner and the lender will be in constant communication during this process so there are no surprises and so that everyone can work together.
A short sale might be an option for both the lender and the homeowner at this stage as well. The lender knows that if the foreclosure goes forward, the ultimate price collected for the home will likely be lower than what they might get during a short sale. The homeowner knows that this might be the only way to avoid having a foreclosure action and the resulting credit damage. Working with a real estate agent or broker who specializes in short sales or foreclosure homes is a good idea to ensure a short sale goes forth to the benefit of both parties.
If you are a homeowner who is in pre-foreclosure, it is essential to talk to your lender. It might be more comfortable to avoid the phone calls and the letters, but the sooner you discuss what is going on with your mortgage company, the more options you will have on the table to avoid foreclosure. If you want to stay in your home, you might be able to work out a modification. There are several federal programs in place designed to help struggling homeowners catch up on their mortgages and stay in their homes. Talk to your lender about these possibilities. You might be able to get your monthly payment reduced or your interest rate lowered.
When staying in your home is impossible, explore the other options before you get to the foreclosure stage. Your lender might be willing to let you unload your home through a short sale, but you will not know unless you communicate. If you need help, talk to a real estate lawyer or a foreclosure expert who can help you avoid a foreclosure. When you are still in the pre-foreclosure stage, you still have options that can help you.
If you are looking to buy a home, consider looking for those that are in pre-foreclosure. You will have a lot of leverage in negotiating a price and a closing date. Make an offer that is fair, and you will likely get a contract in place faster than you would if you were house hunting in the regular real estate market.
This post was written for Mission Driven Brand, LLC by Stephen K Hachey. ?Stephen is an Tampa Real Estate Lawyer specializing in loan modifications, short sales, foreclosure and much more. He is also the owner of his own practice, the Law Offices of Stephen Hachey, PA. This article is for general informational purposes only and does not establish an attorney-client relationship. Please contact a licensed attorney in your state of residence. For more information on our services, please visit our website at www.floridarealestatelawyer.org
Source: http://missiondrivenbrand.com/pre-foreclosures-how-to-approach-home-owners-how-to-get-out-of-it-etc/
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