Foreclosure Information

The following is a generalized breakdown concerning the foreclosure process. If you have any questions, please don't hesitate to contact us.

Foreclosure - A foreclosure occurs when the owner of a property is no longer able to make principle or interest only payments on his or her loan. This typically leads to the property being seized and sold by the bank or via auction.

Stages of Foreclosure
The foreclosure process begins with the property owner missing payments. After about three to six months of missed payments, the lender will order a trustee to record a Notice of Default at the County Recorders office. This puts the borrower on notice that he or she is facing the possiblity of foreclosure and starts a reinstatement period that will typically run until five days before the home is auctioned off.

If the default isn't corrected within three months, a foreclosure sale date is established. The homeowner will recieve a Notice of Sale, and this notice will also be posted on the propery. In addition, the Notice of Sale is recorded at the County Recorder's office in the county where the property is located. Lastly, the property is listed in newspapers local to the county in question over a three-week period.

Foreclosure Auction
At auction, an opening bid on the property is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale for the lender.

If this occurs, and the opening bid is not met, the property is deemed an REO or Real Estate Owned property. This often happens because properties that are up for sale at foreclosure are usually worth less than the total amount owed by the lender.

When you purchase a property at a foreclosure sale, all junior liens other than property taxes are wiped out. Priority of liens is determined by the date of recording. When you purchase a Real Estate Owned property you will typically recieve the property with a clean title.