Cycle of Foreclosures?

7 Replies

Newbie here...so what's the life cycle of a house that goes to into Foreclosure? courthouse auction--->bank sells where?--->MLS?

I ask because I'm a huge fan of the 3ft rule and I talk to anyone I can about real estate (even though I'm hunting for my first deal) and a lady at my Bank was telling me about a property. I went to the courthouse, used a skiptrace, tried contacting the who I believed to be the owner with no luck, and then saw it the next week on the Auction list at Sheriff's sale. I don't know if it sold or not because I didn't have time to go and am not experienced enough to buy one there for my first one. 

What's the best way to find if it sold and if not, where it goes next?

Thanks!

the "Life Cycle" is state dependent, except for the first part. Nationally, no foreclosure, for payment default, can commence prior to the 120th day of delinquency.

I would find the time to attend the next sale. That gives you an idea of how the process works. It either sells, or reverts back to the beneficiary (The bank), each and every time. Some states have redemption periods, meaning the owner has a set amount of time to buy it back by paying the default amount/judgement amount/sale amount. If it sells 3rd party (someone bid on it), that party owns it and will do with it what they please. Occupy it, tear it down, rent it, flip it, etc.. If it doesn't sell and reverts back to the beneficiary, it becomes REO (Real Estate Owned) to the bank. They will rent it, tear it down, flip it, etc.. as well. If the bank gets it and sells it, they will sell it through a licensed agent. They may auction it. They may sell it in bulk with a group of other properties to an investor. That investor may rent it, tear it down, flip it, etc.. and the cycle continues on and on.

The best way to tell if it sold, is to be there at the sale.

Welcome to biggerpockets! If a property fails to get sold at a foreclosure auction, it usually becomes an REO. You can find them listed on sites like MLS. In order to find out whether a particular property was sold you could try contacting the trustee in charge of the sale. However, if you are starting out you should look into real estate wholesaling, as opposed to foreclosures, pre-foreclosures and auctions.

Good Luck!

Originally posted by @Ron S. :

Nationally, no foreclosure, for payment default, can commence prior to the 120th day of delinquency.

Ron,

Are you saying there is a Federal requirement to hold off on filing an action until 120 days have past? Or, are you suggesting it is a convention yet not a legal requirement?

If the lender is a private company and not a regulated bank, could the period before action is taken be less than 120 days?

Any references or links to where the regulations are listed? 

 

Originally posted by @John Corey :
Originally posted by @Ron S.:

Nationally, no foreclosure, for payment default, can commence prior to the 120th day of delinquency.

Ron,

Are you saying there is a Federal requirement to hold off on filing an action until 120 days have past? Or, are you suggesting it is a convention yet not a legal requirement?

If the lender is a private company and not a regulated bank, could the period before action is taken be less than 120 days?

Any

Federal requirement. Absent very specifica exemptions (Like fraud); For a consumer loan, SFR 1-4, loan to a natural entity, you may not file the first legal until the 120th day of delinquency.

https://files.consumerfinance....


 

Originally posted by @Ron S. :
Originally posted by @John Corey:
Originally posted by @Ron S.:

Nationally, no foreclosure, for payment default, can commence prior to the 120th day of delinquency.

Ron,

Are you saying there is a Federal requirement to hold off on filing an action until 120 days have past? Or, are you suggesting it is a convention yet not a legal requirement?

If the lender is a private company and not a regulated bank, could the period before action is taken be less than 120 days?

Any

Federal requirement. Absent very specifica exemptions (Like fraud); For a consumer loan, SFR 1-4, loan to a natural entity, you may not file the first legal until the 120th day of delinquency.

https://files.consumerfinance....


Thanks. Interesting that the deliquence triggers for things which are not a periodic payment are handled a bit different. Having the link to the info was great!

Originally posted by @John Corey :
Originally posted by @Ron S.:
Originally posted by @John Corey:
Originally posted by @Ron S.:

Nationally, no foreclosure, for payment default, can commence prior to the 120th day of delinquency.

Ron,

Are you saying there is a Federal requirement to hold off on filing an action until 120 days have past? Or, are you suggesting it is a convention yet not a legal requirement?

If the lender is a private company and not a regulated bank, could the period before action is taken be less than 120 days?

Any

Federal requirement. Absent very specifica exemptions (Like fraud); For a consumer loan, SFR 1-4, loan to a natural entity, you may not file the first legal until the 120th day of delinquency.

https://files.consumerfinance....

Thanks. Interesting that the deliquence triggers for things which are not a periodic payment are handled a bit different. Having the link to the info was great!

Agreed but...if you accelerate for other defaults (Not payment default), you still have to wait 120 days. Like the examples given in the FAQ's, if you breach the loan for habitability, you send them a demand for the entire amount of the balance of the loan. If they don't pay it, then it becomes a payment default, and you have to wait for 120 days before referring to foreclosure.

 

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