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February 2011
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February 2011

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  • 1. 2011 FE B RUA RY U P D A T E FREE FE BRUARY FO R E C L O S U R E S Caleb and Jodi Moore Moore & Co. Realtors Cell : 479-857-3409 or 479-970-8303 Office : 479-968-3300 Email : caleb@cmoorerealestate.com www.cmoorerealestate.com Friendly Advice from Caleb and Jodi Moore Foreclosures are flooding investment as well as wont be easy. Buying a the real estate market at important terms to know foreclosure is tricky, but if record rates. This issue when dealing with you do your homework offers tips on how to buy foreclosures. If youre and follow these 10 steps, a bank-owned or real looking for a bargain in a you can land a great deal estate owned property sea of foreclosures, it on a home.
  • 2. Foreclosure Guide1. Understand the Foreclosure work with an agent or court order to sell the Process lender. You can also look property. Foreclosure is a process for notices of defaults and that allows a lender to auctions in public records 8. Find Financing recover the amount owed and local newspapers. Whether you use cash, a on a defaulted loan by home equity line of credit, selling or taking ownership 5. Check the Property Liens resources from other (repossession) of the A lien is a legal claim on a investors or mortgage property securing the loan. property by a lender or products, secure the money It begins when a borrower/ other entity that is owed for your purchase in owner defaults on loan money by the owner of the advance. Sellers only want payments and the lender property. In addition to the to work with serious buyers files a public default notice outstanding mortgage who are ready to buy or a lis pendens (Latin for balance, buyers need to be quickly. You could miss an "lawsuit pending"), aware of other liens, which opportunity if you dont depending on the state. can drive up the purchase have your financing in price. Examples include place.2. Choose a Foreclosure Stage outstanding property taxes Youre Comfortable With and unpaid repairs or There are different stages remodeling done by a 9. Know Who to Contact and in the foreclosure process, contractor. How to Approach the and each stage offers Owner unique advantages and 6. Do the Math Depending on the property disadvantages for the Calculate how much youll status, the seller will be the buyer. For instance, some need to sink into the owner in default, the trustee buyers prefer buying bank- property, outside of (the person or party who is owned properties because mortgage and tax filing the paperwork to theyre uncomfortable payments. Necessary initiate and carry out the dealing with distressed renovations, upgrades and foreclosure), or the homeowners. other expenses can pile up foreclosing lender. and eat into your profit3. Contact a Real Estate Agent margin. 10.Make an Offer If youre a first-time Use a return on investment Usually the offer amount is homebuyer and youve calculator to determine your somewhere below the never purchased a home, potential IRR (internal rate market value but above the let alone a foreclosure of return) on a property. total outstanding liens and property, a good real estate estimated repair costs. If agent can be a helpful 7. Research the Local State the property is a pre- resource and guide you Foreclosure Laws foreclosure or bank-owned, through the process of California and Texas, for you could prepare an offer buying a foreclosure and example, follow non-judicial similar to a typical purchase drawing up a purchase foreclosure process, which offer, contingent on a full agreement. Make sure they means that lenders are not inspection and title search. know your priorities. required to go to court or file a lawsuit to repossess a4. Find Foreclosure Properties home. Other states like The easiest way to find New York and Florida foreclosures is to subscribe require the lender to sue to online listing services or the borrower and get a
  • 3. FORE C L O S U R ES I N YO U R A R E A How to Buy a Bank-Owned Property1. ASK YOUR REAL ESTATE or Real Estate Owned AGENT TO CHECK THE MLS Under this buying stage, the lender potential bargain is often less than FOR BANK-OWNED or bank has taken ownership of the a pre-foreclosure or auction PROPERTIES property, either through an property. Heres how to buy bank-2. CHECK THE POTENTIAL agreement with the owner during owned properties or REOs: BARGAIN ** pre-foreclosure or at the public **Banks break-even amount -- includes the auction. REO means "real estate unpaid balance of the loan, any fees and costs3. CONTACT THE LENDER incurred during the foreclosure process and THROUGH AN AGENT TO owned" by the lender and indicates any other liens the bank had to pay off to take EXPRESS YOUR INTEREST ownership of the property. Estimated market the house has already gone IN SEEING THE PROPERTY value.Your monthly expenses as a homeowner AND MAKING AN OFFER through the foreclosure process (mortgage payment, taxes, insurance, repairs, etc.)Subtract all your costs as a buyer (break- and has been repossessed by the 4. NEGOTIATE A PURCHASE even amount, additional liens, repair costs) lender. The lender usually sells the from the estimated market value of the AGREEMENT - BUY AS IS property, and use that number as a basis for property to recover the unpaid your offer to the bank. This is all public 5. CLOSE THE DEAL loan amount and typically clears information so you can research on your own with the county recorder, consult a local real the title for any buyer. But the estate agent.
  • 4. Arkansas B A N K R UP TCYForeclosure Laws A LEGAL RECOURSE THAT ALLOWS APre-foreclosure Period PERSON OR BUSINESS TO CLEAR ANY DEBT OBLIGATIONS BY REORGANIZINGIn Arkansas, foreclosures can be handled THE PAYMENT AMOUNT AND PAYMENTeither in or out of the court system, but SCHEDULE OF THOSE DEBT OBLIGATIONS.the lender must have an appraisal of the A BANKRUPTCY STALLS THE FORECLOSUREproperty taken before the scheduled PROCESS, KEEPING A FORECLOSINGforeclosure date. LENDER FROM PROCEEDING WITH THE FORECLOSURE UNTIL THE BANKRUPTCYIn a court-handled foreclosure, the court PROCEEDINGS ARE COMPLETED OR THEdetermines the amount in default and COURT IN CHARGE OF THE BANKRUPTCYgives the borrower a short time to pay ALLOWS THE LENDER TO CONTINUE WITHthe debt to the lender. If the borrower THE FORECLOSURE.fails to pay the full amount owed withinthat timeframe, then the property goes upfor sale, usually about 30 days after thecourt considers the matter. D E E D OF TRU S TPower-of sale clauses in mortgages allowlenders to foreclose on property indefault without going through the court A LEGAL DOCUMENT THAT DICTATESsystem. To begin the foreclosure process THE TERMS OF A LOAN USED TO BUY Aout of court, the lender will have a notice PROPERTY AND TRANSFERS THEof default filed with county records. The OWNERSHIP OF THE PROPERTY TO Aborrower can stop the foreclosure THIRD PARTY CALLED A TRUSTEEprocess by paying off the amount owed UNTIL THE LOAN HAS BEEN PAID INany time before the foreclosure sale. FULL. THE TRUSTEE CAN SELL THE PROPERTY TO RECOVER THE REMAINING LOAN BALANCE FOR THEARKANSAS FORECLOSURES LENDER IF THE BORROWER VIOLATES THE TERMS OF THE LOAN (I.E. DOESARE HANDLED BOTH IN NOT MAKE MONTHLY PAYMENTS).COURT AND OUT OF COURT. ATYPICAL OUT-OF-COURTFORECLOSURE CAN LAST ALITTLE LESS THAN THREEMONTHS. F OR E C LO SU R ENotice of Sale/Auction A PROCESS THAT ALLOWS A LENDERFor power-of-sale foreclosures handled TO RECOVER THE AMOUNT OWED ONout of the court system, the notice of A DEFAULTED LOAN BY SELLING ORdefault filed by the lender also serves as TAKING OWNERSHIP (REPOSSESSION)the notice of sale, as it contains all the OF THE PROPERTY SECURING THEinformation pertinent to the sale (time, LOAN. THE FORECLOSURE PROCESSlocation, property description, etc.). BEGINS WHEN A BORROWER/OWNERWithin 30 days of this notice of default DEFAULTS ON LOAN PAYMENTS (USUALLY MORTGAGE PAYMENTS) ANDbeing recorded, a copy of the notice and THE LENDER FILES THE NECESSARYthe lenders intention to sell is mailed to DOCUMENTS TO BEGIN THEthe borrower. FORECLOSURE PROCEEDINGS.
  • 5. The lender also posts a notice of sale inthe office of the county recorder. The F OR EC LO SU R Enotice is published in a local newspaperfor four consecutive weeks, with the final SALEnotice being published at least 10 daysbefore the sale. A PUBLIC SALE OF A PROPERTYAt the sale, which is run by an auctioneer, TO RECOVER A DEBT OWED BYanyone can bid on the property, with the THE OWNER OF THE PROPERTY.exception of the trustee, who may only THE SALE CAN BE OFFICIATED BYbid on behalf of the lender. The highest A TRUSTEE, AN ATTORNEY OR Abidder is awarded ownership of the LOCAL GOVERNMENT OFFICIAL,property and must pay the full bid price DEPENDING ON STATE LAW.within 10 days of the sale. For out-of-court foreclosures, the borrower has noright to redeem the property after thesale. L IS P E N D EN SA LENDER MUST HAVE ANAPPRAISAL OF THE PROPERTYTAKEN BEFORE THE LATIN FOR "LAWSUIT PENDING,"SCHEDULED FORECLOSURE A PUBLICLY RECORDED NOTICEDATE OF A PENDING LAWSUIT AGAINST A PROPERTY OWNER THAT MAY AFFECT THE OWNERSHIP OF A PROPERTY. SOME STATESThe property must sell for no less than REQUIRE LENDERS TO FILE A LIStwo-thirds of the appraised value. If this PENDENS TO BEGIN THEvalue is not met, the property must be FORECLOSURE PROCESS IF Aoffered for sale again within 12 months of BORROWER IS IN DEFAULT ONthe original sale date. If this occurs, the LOAN PAYMENTS.second sale awards the property to thehighest bidder, regardless of the appraisalprice.If the property is foreclosed through the M ORT GAG Ecourts, the borrower has one year fromthe date of the sale to redeem theproperty, provided that they pay the A DOCUMENT THAT DICTATES THEamount of the purchase price from the TERMS OF A LOAN USED TO BUY Aauction plus interest. PROPERTY AND GIVES THE LENDER SOME CLAIM TO THE PROPERTY (EITHER OWNERSHIP OR A LIEN) UNTIL THE LOAN HAS BEEN PAID IN FULL. THE LENDER CAN TAKE STEPS TO HAVE THE PROPERTY SOLD TO RECOVER THE REMAINING LOAN BALANCE IF THE PROPERTY PURCHASER
  • 6. Thank you for N OT IC E O Fviewing our D E FAU LTnewsletter. Wehope it was A PUBLICLY RECORDED NOTICE THAT A PROPERTY OWNER HASinformative, yet MISSED SCHEDULED LOAN PAYMENTS FOR A LOAN SECUREDnot exhaustive. BY A PROPERTY. SOME STATES REQUIRE LENDERS TO RECORD APlease feel free to NOTICE OF DEFAULT TO BEGIN THE FORECLOSURE PROCESS.give suggestions tomake it better and/or topics youwould like to know N OT IC E OF SA LEmore about. (N T S OR NF S) A DOCUMENT ANNOUNCING THE PUBLIC SALE OF A PROPERTY TOWE LOVE THE ART OF RECOVER A DEBT OWED BY THEHELPING PEOPLE. REAL OWNER OF THE PROPERTY. THEESTATE IS A FUN AND NOTICE IS MAILED TO PARTIESFULFILLING WAY TO DO JUST AFFECTED BY THE SALE OF ATHAT. PLEASE LET US KNOW PROPERTY, ADVERTISED IN LOCALIF WE CAN EVER DO PUBLICATIONS AND RECORDED IN PUBLIC RECORDS. AMONG OTHERANYTHING FOR YOU OR JUST INFORMATION, IT PROVIDES THEGIVE FRIENDLY ADVICE! Happy P OS TP ON E M ENTValentine AN ANNOUNCEMENT -- USUALLY s Day MADE AT THE TIME AND PLACE OF THE ORIGINALLY SCHEDULED FORECLOSURE SALE -- THAT ESTABLISHES A NEW DATE AND 2011 TIME FOR THE SALE.

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