There will be a structured foreclosure process, the time that a foreclosure is registered, in every state. In a judicial state, the time starts when the lawsuit, is filed. In a non-judicial state, the timing starts when the Notice of Default or Notice of Trustee Sales is filed. This is the pre-foreclosure stage. You will make the most money in this stage, which we will talk about this later in this text.
Ordering a Trustee Sale Guarantee (TSG): This is another name for a Title Report.
There must be a notice sent to every single person with interest in the property being foreclosed -As in anyone and everyone with a lien on the property, even a mechanic’s lien, or anyone with a second mortgage. This is to inform all parties concerned with the real property.
Substitution of trustee: In a non-judicial state, there is always a Substitution of Trustee. This stems from the three tiered approach, which consists of:
Trustor, borrower of the money, Trustee, a beneficiary, Trustee, the one entrusted to handle the case or oversee the process
You may see a Substitution of Trustee posted at the County Recorder’s Office. This trustee only handles foreclosures and will follow the process to the end.
The Posting of Legal Notices -As required by law, as the affair concerns land and property, it should be made public through a legal notice. This notice contains only the information valid for public consumption; in other words, nothing that might be detrimental to the case or the parties involved. The notice appears on newspapers, publications, even special county-owned legal publications, and on the site of the property itself.
Maintain contact -Contact with the title company must be maintained, in the interest of ensuring that no other liens are attached to the foreclosed property. One thing that can put a stop to the foreclosure is bankruptcy, as that is handled by federal law, completely superseding state laws in the case.
Prepare a credit bid: The beneficiary or mortgagee prepares a credit bid, which is the starting bid/amount at the auction, depending on the state and the state statutes.
In most states, the credit bid will include the principle balance plus all of the arrearages, including: Bank interest, Penalties, Legal fees
Other arrearages can include second mortgages and homeowner’s association fees. In a judicial state, the lawyer for the mortgage company/bank will prepare the credit bid. In a non-judicial, the Trustee will prepare the bid.
Make payment and reinstate the loan: The owner can perform this task. Suspend or cancel the sale at any time: The beneficiary or mortgagee can do this, if suitable arrangements have been worked out with the owner beforehand
Notice of Trustee Sale. This notice contains when and where the auction will be held. It also contains the legal property description -available in the County Tax Assessor’s Office. As a legal document, care should be taken to match the actual address with the document -note that addresses change over a period of time.
Due on Sale clause. This is a clause in the mortgage that legally binds the borrower to pay the lender in full -should the property be sold or transferred at any time. At this point, the lender holds no authority to stop any sale or transfer, but instead has the authority to legally demand full payment. Financially speaking, for the lender, this has the same effect.
In the absence of a Due on Sale clause, the loan is assumable without the lender’s consent. Older FHA and VA loans are assumable without the consent of the lender. How does this impact the sale of a foreclosed property? If you get a warranty deed from the owner at the time of the foreclosure sale or in the pre-foreclosure timeframe, as long as you keep making the payments, the bank will most likely be not be aware of the transfer. If you buy the property and then sell it immediately or even later on, you will be fulfilling that requirement of paying off the loan at that time.
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