Foreclosures

What is a foreclosure? A foreclosure is the forced sale of a piece of real estate to repay a debt.

Indebtness can be in the form of:

Mortgage Unpaid property taxes Builder and mechanic liens Delinquent income taxes Property seizure Forfeiture on account of criminal activities

Mortgage

Unpaid property taxes

Builder and mechanic liens

Delinquent income taxes

Property seizure

Forfeiture on account of criminal activities

Steps in the Foreclosure Process Pre-foreclosure Occurs within 30 days following the default on a payment. After attempting to notify the borrower of the consequences the lender will send a formal notice of default to the borrower within a specific timeframe.

Pre-foreclosure

Occurs within 30 days following the

default on a payment.

After attempting to notify the borrower

of the consequences the lender will

send a formal notice of default to the

borrower within a specific timeframe.

Redemption period is the time which the property can be reclaimed by paying the past-due amounts or loan balance. The redemption period will vary from state-to-state.

Redemption period is the time which the property can be reclaimed by paying the

past-due amounts or loan balance.

The redemption period will vary from state-to-state.

Auction The auction can occur: a sheriff’s sale a private party. Risky because investors have limited means of viewing the property prior to the sale.

Auction

The auction can occur:

a sheriff’s sale

a private party.

Risky because investors have limited means of

viewing the property prior to the sale.

REO (Real Estate Owned Property) REOs are properties owned by a lender as the result of default by borrower and subsequent foreclosure by the institution.

REO (Real Estate Owned Property)

REOs are properties owned by a lender as the

result of default by borrower and subsequent

foreclosure by the institution.

REOs cont’d The risk for investors buying REOs may be less The return on investment could be less too.

The risk for investors buying REOs may be less

The return on investment could be less too.

Facts You Should Know ….. The foreclosure process from Notice of Default to Judicial sale is 300 days in Illinois.

The foreclosure process from Notice of Default to Judicial sale is 300 days in Illinois.

Facts You Should Know… There are two types of foreclosures: Judicial-Court-ordered action. Non-judicial take less time to complete because the borrower pre-authorizes the sale of the home in the loan document in the form of a trust deed.

There are two types of foreclosures:

Judicial-Court-ordered action.

Non-judicial take less time to complete because the borrower pre-authorizes the

sale of the home in the loan document

in the form of a trust deed.

It’s importance…. Judicial foreclosures occur in lien-theory states. Non-judicial foreclosures occur in title-theory states.

Judicial foreclosures occur in lien-theory states.

Non-judicial foreclosures occur in title-theory states.

Important Facts Illinois is a lien theory state. In a lien-theory state, the deed is in the name of the borrower and the lender places a lien on the property. The lien theory takes up more time in a foreclosure procceeding.

Illinois is a lien theory state.

In a lien-theory state, the deed is in

the name of the borrower and the lender places a lien on the property.

The lien theory takes up more time in a foreclosure procceeding.

More important facts… In a title theory state, the lender holds title to the property in the name of the borrower through a deed of trust. The title remains in the name of the lender until the loan is paid in full.

In a title theory state, the lender holds title to the property in the name of the borrower through a deed of trust. The title remains in the name of the lender until the loan is paid in full.

Some states have a combination of both lien and title theory which is called intermediate theory. The borrower’s name appears on the title as the owner When the owner defaults, ownership transfers to the lender.

Some states have a combination of both lien and title theory which is called intermediate theory.

The borrower’s name appears on the title as the owner

When the owner defaults, ownership transfers to the lender.

Questions………