Q. How does the foreclosure process work? What is the normal duration in Orange County?
A. Foreclosure is the process by which a lender takes a property away from a borrower who has defaulted on his loan. The process varies from state to state.
The time can vary greatly. Technically, the bank can file a Notice of Default when you miss one payment, but they seldom are that fast on the trigger. After 90 days (from NOD filing) they can file a Notice of Intent to Sell, also known as Notice of Trustee’s Sale, and 21 days later (time varies from state to state) they can submit the property to the county clerk for sale “on the courthouse steps.” They have an automatic bid of their loan amount + foreclosure fees. If no one else buys it, they take it back and it becomes part of Real Estate Owned on their balance sheet.
It is seldom that fast as they give people lots of time to get out of a bind and to start making payments again. I think that a year is not uncommon.
After they own the home, it may take them time to decide to market it. If they already own 20 homes in an area and they have 20 more to market, it would be counter productive, as I think they see it, to put all 40 on at once. Agree?
From the standpoint of a potential buyer, a lender who now owns a property is more likely to sell at a lower price than the original owner would have, thus creating an opportunity for a new buyer.
All that said, this topic is complicated enough so that you can write a book about it. Indeed I found 152 titles on this topic at www.amazon.com. I suggest you look at the choices, buy one or two, and start your education.
Q. I live in a co-op in Laguna Woods Village and it is now upside down and comes with a large association fee. When I moved in I was working two jobs. I was laid off from one and got my hours cut from the other. The teaching budget doesn’t look like it is going to improve for a while. I have a year’s salary to live on with unemployment helping. I like solutions so I have called many companies, but they don’t handle co-ops. My mortgage company gave me a $100 discount for four months. Was told to call HUD – haven’t gotten through when I called. What options do I have and what plans might be available for me? How do I weed out the scam companies advertising help?
A. I am sorry to hear of your plight that is so similar to others. Yours is complicated because of the co-op feature. Those properties are rare enough that many lenders decided to avoid having to train their people about such a small slice of the market, so they just do not offer the programs.
I would work with your existing lender and I would try calling a HUD approved counselor such as the Consumer Credit Counseling Service of Orange County at 714-547-2227. I hope that you can make progress that way.