Caught up in Foreclosure and In Need of Help

A homeowner in Dallas contacted me in December and told me their lender had just filed to foreclose on their house and wanted to know if I could help them.

I met with them soon after and read the notice to foreclose. It was scheduled to go to the auction on February 6th, 2008. I asked the owners what they wanted to do and they told me they had wanted to stay but could not keep up with the payments. They had decided to sell the house but even though the house had over 20% equity, the chances of listing the house, finding a buyer and have it close before February 5th was remote.
They needed time to sell and the lender had said, “Enough.”

I gathered their paperwork together and told them I would see what I could do to help them and told them they should contact a Realtor and list the house as soon as they could.

Once I was home, I got on the Internet and looked the property up on the Central Appraisal District (Tax records). The legal notice of foreclosure in Texas must always list the legal description address for the property. I looked at the legal address of the house on the website and then checked the foreclosure notice. The Trustee (person appointed by the lender to conduct the foreclosure proceeding) had made a mistake on the legal description. The Lot & Block was Lot A, Block 9 of Rolling Hills Addition 2 and the Trustee had listed Lot A, Block 8 of Rolling Hills Addition 2. I contacted the homeowner and had them notify the Trustee that they made an error on the foreclosure notice and they planned to contest it if they did not delay the sale.

The foreclosure was pulled and the homeowners gained another month of time.

The owners had traffic on their house but had not received an offer. A few weeks later I saw the house was listed on the foreclosure list for the March 4th sale which meant the Trustee filed to foreclose again. The owners told me they had not been notified. Texas law requires that a homeowner be notified by mail no later than 21 days before the foreclosure auction date (in Texas it is the first Tuesday of the month). I had them contact the Trustee and he informed them that he had mailed it to them.

A few days later the owners got the letter but the envelope had the wrong address listed and the letter took extra time to deliver because of it. That is what I had thought anyway. The owners showed me the notice and the envelope. The actual letter had been dated February 8th but the postmark showed February 14th. The Trustee did not mail the letter until the 13th or the 14th. The notice has to be postmarked no later than 21 days before the next auction and the February 14 postmark on the owners’ envelope left only 19 days before the sale. The Trustee had messed up again and was forced to file to foreclose again.

The good news was the homeowners had found a buyer for their house. I made sure the buyer’s agent knew of the impending foreclosure sale so they could make sure everything was done in time so the house could close before the auction date.

The inspection on the house turned up a few issues that would need to be repaired before the lender would fund the sale. I became worried that the house would not close in time because of the delay for repairs. I asked the owners to show me the current foreclosure notice and studied it again. It looked like everything was correct and in order and as I was handing it back to the owner, I noticed the legal address and looked at it again. I asked to see the previous notices and went to the Appraisal District website.

I was in disbelief when I verified the Trustee had neglected to include “Addition 2” after the “Rolling Hills” on the legal description.

You guessed it. The owners contacted the Trustee and contested the notice. Because of the Trustee’s 3rd error, they will have to file to foreclose a 4th time but the owners now have nearly six weeks for their house to close and it is scheduled to close in less than 2 weeks.

I am hopeful that this article will help some people who may face foreclosure. Trustees are people and people do make mistakes.
I told the homeowners…

“If the lender is going to enforce the terms of their mortgage by holding them accountable, then they have the right to hold the lender and/or Trustee accountable for making errors in the foreclosure process.”

All of the filing and re-filing costs money and the Trustee passes those fee’s on to the lender who adds those fee’s to the balance owed on the mortgage. In other words, the homeowner is penalized and charged extra because of the errors made by the Trustee.

I would be interested to know if a homeowner can contest those extra fees and not have to pay them. Anyone know the answer to that?

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Tags: avoid foreclosure, default, fighting foreclosure, foreclosure, foreclosure help, mortgage, trustee

What is a Foreclosure?

A foreclosure occurs when a property owner cannot make principal and/or interest payments on his/her loan, typically leading to the property being seized and sold.

How does a foreclosure occur?

The foreclosure process is not very difficult to understand. There are several stages during which the homeowner has an opportunity to bring the loan current and avoid foreclosure.

After about three to six months of missed payments, the lender orders a trustee to record a Notice of Default (NOD). At the County Recorder’s Office. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.

If the default isn’t corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder’s Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.

The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trustee’s deed to the property.

What Happens at the 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 a REO or Real Estate Owned. This typically occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender.

When you purchase 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 REO aka. Bank REO, you will typically receive the property with a clean title.

Learn How to Avoid Foreclosure from HUD.

Discuss Foreclosures at our:

• General Foreclosure Talk Forum

• REO Forum

Find Foreclosed Properties:

• Bank REO Listings
• Pre-Foreclosures
• Government Foreclosures
• Asset Management REO

Tags: auction, bank, default, foreclosure, interest, lien, mortgage, NOD, noticeofsale, principal, REO, sale, trustee