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What can you expect during the foreclosure process? Jeff Spindler & Omar Ruiz Pre-foreclosure Specialists Jeff Spindler & Omar Ruiz Pre-foreclosure Specialists.

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Presentation on theme: "What can you expect during the foreclosure process? Jeff Spindler & Omar Ruiz Pre-foreclosure Specialists Jeff Spindler & Omar Ruiz Pre-foreclosure Specialists."— Presentation transcript:

1 What can you expect during the foreclosure process? Jeff Spindler & Omar Ruiz Pre-foreclosure Specialists Jeff Spindler & Omar Ruiz Pre-foreclosure Specialists How does a Foreclosure work? © 2008 LeRu Investments LLC

2 Definitions Foreclosure - A legal process in which, against the wishes of the owner, real property is sold to satisfy a public or private debt for which the real property has been pledged as security. Notice of default (NOD) - a notice that is filed with the county recorder when a homeowner is not current on the loan that is secured by the property. If the default is not cured within a statutory period of time, the lender can move to auction the property to the highest bidder. Notice of Trustee Sale (NOTS) - a notice that is filed with the county recorder when a property is severely delinquent and a foreclosure sale date has been set. Foreclosure Sale - The actual sale of real property at the conclusion of a foreclosure proceeding. The sale may be to a third party as a result of a high bid, or to the foreclosing creditor (the lender) if there are no bids higher than the amount of the defaulted debt plus foreclosure costs. If the sale generates proceeds beyond the satisfaction of the debt and foreclosure costs, the balance generally must be refunded to the party who has lost title to the property. (the homeowner) Real Estate Owned (REO) - Real property that has been foreclosed by a lender and that did not sell at auction and is now owned by the lender. Foreclosure - A legal process in which, against the wishes of the owner, real property is sold to satisfy a public or private debt for which the real property has been pledged as security. Notice of default (NOD) - a notice that is filed with the county recorder when a homeowner is not current on the loan that is secured by the property. If the default is not cured within a statutory period of time, the lender can move to auction the property to the highest bidder. Notice of Trustee Sale (NOTS) - a notice that is filed with the county recorder when a property is severely delinquent and a foreclosure sale date has been set. Foreclosure Sale - The actual sale of real property at the conclusion of a foreclosure proceeding. The sale may be to a third party as a result of a high bid, or to the foreclosing creditor (the lender) if there are no bids higher than the amount of the defaulted debt plus foreclosure costs. If the sale generates proceeds beyond the satisfaction of the debt and foreclosure costs, the balance generally must be refunded to the party who has lost title to the property. (the homeowner) Real Estate Owned (REO) - Real property that has been foreclosed by a lender and that did not sell at auction and is now owned by the lender. © 2008 LeRu Investments LLC

3 California Foreclosure Timeline The timeline displayed here is typical in a California non-judicial foreclosure. The foreclosure timeline does not begin until the lender feels they have exhausted all avenues for curing the payment delinquency. Normally, this happens after the borrower has missed 1 to 3 monthly mortgage payments. The borrower has probably been contacted by the lender several times prior to beginning the foreclosure process. The official foreclosure process then begins by the lender contacting the Trustee and instructing them to file a Notice of Default. The timeline displayed here is typical in a California non-judicial foreclosure. The foreclosure timeline does not begin until the lender feels they have exhausted all avenues for curing the payment delinquency. Normally, this happens after the borrower has missed 1 to 3 monthly mortgage payments. The borrower has probably been contacted by the lender several times prior to beginning the foreclosure process. The official foreclosure process then begins by the lender contacting the Trustee and instructing them to file a Notice of Default. © 2008 LeRu Investments LLC

4 NOD Timeline After 3 missed payments a NOD can be recorded. Day 1 - Notice of Default recorded with County Recorder. Within 10 business days - Notice of default is mailed by the Trustee to the borrower and includes the recording date. Within 1 month - Notice of Default is mailed to borrower again. After 91 Days - Notice of Default period ends and Notice of Trustee Sale period begins. After 3 missed payments a NOD can be recorded. Day 1 - Notice of Default recorded with County Recorder. Within 10 business days - Notice of default is mailed by the Trustee to the borrower and includes the recording date. Within 1 month - Notice of Default is mailed to borrower again. After 91 Days - Notice of Default period ends and Notice of Trustee Sale period begins. 1 st Missed payment 2 nd Missed payment 3 rd Missed payment NOD Filed (Begin Three Month Period) NOD Filed (Begin Three Month Period) NOTS Filed (21 Day Period Begins) NOTS Filed (21 Day Period Begins) Auction TYPICALLY Held after 21 Days Auction TYPICALLY Held after 21 Days Foreclosure Process © 2008 LeRu Investments LLC

5 NOTS Timeline After 90 Days - Sale date, time, and location are set. 30 days prior to sale date Notice of Sale is sent to IRS (if applicable). 20 days prior to sale date –Notice of Sale is published in newspaper and is required to run for 3 consecutive weeks. –Notice of sale is posted on the property. –Notice of sale is mailed to borrower and required parties involved. 14 days prior to sale date Notice of Sale is recorded in County Recorder's office 5 days prior to sale date – “Your RIGHT to reinstate expires” After 90 Days - Sale date, time, and location are set. 30 days prior to sale date Notice of Sale is sent to IRS (if applicable). 20 days prior to sale date –Notice of Sale is published in newspaper and is required to run for 3 consecutive weeks. –Notice of sale is posted on the property. –Notice of sale is mailed to borrower and required parties involved. 14 days prior to sale date Notice of Sale is recorded in County Recorder's office 5 days prior to sale date – “Your RIGHT to reinstate expires” © 2008 LeRu Investments LLC 1 st Missed payment 2 nd Missed payment 3 rd Missed payment NOD Filed (Begin Three Month Period) NOD Filed (Begin Three Month Period) NOTS Filed (21 Day Period Begins) NOTS Filed (21 Day Period Begins) Auction TYPICALLY Held after 21 Days Auction TYPICALLY Held after 21 Days Foreclosure Process

6 Auction day Sale Date: The property is sold to highest bidder or reverts back to lender as a REO (bank owned) Property Auction time: The final stage of the foreclosure process is the auction. In most cases the borrower has tried every possible way to save the property (refinance, borrowing, sale, joint venture, etc.). Location: Typically takes place at the civic center or the courthouse of the county where the property is located. Auctions start at all different times of the day. Properties are sold "as-is" for cash or cash equivalent. Sale Date: The property is sold to highest bidder or reverts back to lender as a REO (bank owned) Property Auction time: The final stage of the foreclosure process is the auction. In most cases the borrower has tried every possible way to save the property (refinance, borrowing, sale, joint venture, etc.). Location: Typically takes place at the civic center or the courthouse of the county where the property is located. Auctions start at all different times of the day. Properties are sold "as-is" for cash or cash equivalent. © 2008 LeRu Investments LLC

7 So, what are some of your options… Live there until the home forecloses and you are forced out of the home by the sheriff. Move out now and let the home go to foreclosure Create an exit strategy that allows you to preserve your credit… Live there until the home forecloses and you are forced out of the home by the sheriff. Move out now and let the home go to foreclosure Create an exit strategy that allows you to preserve your credit… © 2008 LeRu Investments LLC

8 Here’s what one client did… She lived Rent Free for 6 months Monthly Payments she did not make - –Payment: $3200 X 6 months = $19,200 She was able to save a little money and sell her home as a short sale and avoided the ‘Foreclosure’ ding on her credit She lived Rent Free for 6 months Monthly Payments she did not make - –Payment: $3200 X 6 months = $19,200 She was able to save a little money and sell her home as a short sale and avoided the ‘Foreclosure’ ding on her credit © 2008 LeRu Investments LLC

9 What is a SHORT SALE? Short Sale – A short sale takes place when a lender agrees to accept the sale of a property, even though the money from the sale is not enough to cover the mortgage balance on the property. Basically, the lender agrees to take less than what they are owed and ‘take a loss’ on the loan. The property owner can sell the property before the foreclosure sale. © 2008 LeRu Investments LLC

10 Why would the lender do a short sale? –To avoid the costs of foreclosure –To avoid the risk of having a ‘Bank Owned’ property –To reduce the amount of ‘charge offs’ which hurt the banks stock –It will usually net them a greater return of their mortgage loan than a foreclosure –To avoid the costs of foreclosure –To avoid the risk of having a ‘Bank Owned’ property –To reduce the amount of ‘charge offs’ which hurt the banks stock –It will usually net them a greater return of their mortgage loan than a foreclosure © 2008 LeRu Investments LLC

11 SHORT SALE - Is it possible? Yes! But ONLY with Lender’s APPROVAL! If a short sale is an option, it’s can be a positive outcome for ALL PARTIES. –HAPPY Property Owner (SAVED CREDIT, loan is reported to credit bureaus as PAID IN FULL) –HAPPY Lenders (Avoided COSTLY Foreclosure) –HAPPY Buyer (They bought at a discount) –HAPPY Negotiator (I make money and get the satisfaction of knowing I helped you avoid foreclosure!) Yes! But ONLY with Lender’s APPROVAL! If a short sale is an option, it’s can be a positive outcome for ALL PARTIES. –HAPPY Property Owner (SAVED CREDIT, loan is reported to credit bureaus as PAID IN FULL) –HAPPY Lenders (Avoided COSTLY Foreclosure) –HAPPY Buyer (They bought at a discount) –HAPPY Negotiator (I make money and get the satisfaction of knowing I helped you avoid foreclosure!) © 2008 LeRu Investments LLC

12 Why should you work with me? Accept my service: –I have a team of professionals with over 30 years in bank negotiation and asset management experience –I will either buy your home or find a buyer for you –I don’t make any money until I have helped YOU, so I am invested in a successful transaction! –I will market your property with open houses, signs, etc. –I will also advertise to my exclusive list of Buyers –I’ll be the contact between you & your lender because… Accept my service: –I have a team of professionals with over 30 years in bank negotiation and asset management experience –I will either buy your home or find a buyer for you –I don’t make any money until I have helped YOU, so I am invested in a successful transaction! –I will market your property with open houses, signs, etc. –I will also advertise to my exclusive list of Buyers –I’ll be the contact between you & your lender because… © 2008 LeRu Investments LLC

13 I can make your phone stop ringing! Part of the “Fair Debt Collections Practices Act” states that a creditor can not contact you by phone if you notify them in writing. Sign the ‘Do Not Contact By Phone’ form and I will handle the rest… I will talk to your lender regarding the short sale and handle all of the negotiations and get your approval on the final terms. You can even do it with your credit card or other creditors! Part of the “Fair Debt Collections Practices Act” states that a creditor can not contact you by phone if you notify them in writing. Sign the ‘Do Not Contact By Phone’ form and I will handle the rest… I will talk to your lender regarding the short sale and handle all of the negotiations and get your approval on the final terms. You can even do it with your credit card or other creditors! © 2008 LeRu Investments LLC

14 Of all ills that one endures, hope is a cheap and universal cure. - Abraham Cowley Jeff Spindler & Omar Ruiz The Short Sale Specialists Jeff Spindler & Omar Ruiz The Short Sale Specialists


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