No one wants to deal with foreclosure, but it does happen everyday. The owner’s lose their home and the bank loses its money. It’s not a pleasant situation to say the least. Some banks will work with a homeowner to try to do a “short sale” before foreclosing. This means the owners have to negotiate with the current lender to have them accept a new Buyers offer to purchase the property being foreclosed. The bank and the seller would settle with the buyer’s money for less than what the seller still owed. Hmmm. Yes, it’s as complicated as it sounds, and it’s also a long shot considering some areas allow foreclosure on a home in as little as 30 days past a missed payment.
HOWEVER, there are a few tips for slowing down that foreclosure and postponing the foreclosure date. As an investor, these are key to a successful purchase in this type of situation.
If the Property Has Equity
- 1. Fill out a 3rd party authorization form through a major lender website, and yes you have to use their forms. Once the seller has signed and faxed it back with the contract and proof of funds, call the loss mitigation department in 24 hours to follow up.
- 2. Have the contract signed and executed with earnest money to the title company asap. This will allow you a receipted contract for the major lender and it will bring you one step closer to a closing. The loan number should be displayed at the top of every faxed document to avoid loss and to show you are striving to close this deal.
- 3. Allow a full day (24 hours), before you call to follow up. You may be transferred around from person to person a good bit, so state that it isn’t a short sale and that you need to know a payoff price.
Dealing With a Negative Equity Property
- 1. In order to postpone foreclosure in this type of situation, you need documentation of a short sale. Find an agent who specializes in this area to help you. That is usually required anyway. You will still need the 3rd party authorization. In addition to that, the homeowner needs a hardship letter, and to fill out a completed package that’s provided by the major lender along with their financial information. Fax all of this immediately to request a short sale.
- 2. The bank will require a 3rd party inspection of the home for valuation purposes. Your local market value on current homes will determine this price. Be sure to list all repairs needed in full detail with photographs for documentation. This helps to back up a lower offer. Send in the list immediately. Submit all paperwork (signed, executed, and receipted with financials) and don’t forget the loan number topping each and every page.
- 3. You must follow up on a daily basis. Many factors can affect the time it takes to finally get a response. It may come rapidly or it may take what feels like forever. Remain persistent and calm throughout the waiting period. Once you’ve followed each step relax and remember that it is quite possible to delay and stop foreclosures.