ARE YOU CURIOUS ABOUT FORECLOSURES?

LEARN HOW THE PROCESS WORKS HERE

                      By Raymond Narayan 

Foreclosures are currently in the news with good reason. Everyone must know or has heard of someone who is facing or about to face this heartbreaking nightmare.

This article will explain the Process of Foreclosure, how to deal with it and the possible actions a homeowner may take to avoid or minimize the chances of losing his home and damaging his credit, with all its dire economic consequences. Its primary focus will be to inform and help those facing foreclosure.

A foreclosure situation can come about when a homeowner has not paid his monthly mortgage bill for about three months. During this time the bank will be contacting him to inform him that he needs to correct the situation and bring his balance current.

If after 90 days the homeowner has not been able to correct the situation and pay the overdue balance, the loan is in DEFAULT. The lender may now start the process of foreclosing by filing a Notice of Foreclosure. It is important to note that in New York, Judicial Foreclosure is the primary process used. What this means is that the lender has to take back the property through the court system before this property can be sold. This process sets out steps which the lender must complete to conclude the foreclosure.

One of them is to provide a â??Noticeâ?? to the homeowner (borrower) by â??servingâ?? him with the necessary documents. This is done by serving him personally or because of difficulty here, serving in local newspapers, including there all necessary information.

After the borrower has received legal notice, a court date is set and a LIS PENDENS is then filed to give notice to interested parties of the pending legal action and that there is a Cloud on the Title (no clear title). [Note: the filing of a Lis  Pendens makes the homeownerâ??s situation public. He will now get a barrage of offers to help. Some may be genuine, many will be sharks. The homeowner should avail himself of as much information as he can, retain control and choose wisely]. If the homeowner/borrower is being sued, and has been served personally, he has 20 days in which to appear in court to answer. If the he does not respond, the lender moves for a summary judgment (lender wins hands down).

If the homeowner shows up, both sides present their cases, and if there is no valid defense, the foreclosure will be granted. The court will then appoint a referee who will then determine the amount owed and how the property will be sold. This referee then files his report with the court which will confirm and enter a judgment of sale.

The notice of sale is published weekly for 4 to 6 weeks. The person conducting the sale will execute a deed to the successful bidder when the sale is complete. He will then report the sale to the court for confirmation. Ten percent of the bid price is due on sale with the balance due within 30 days. The lender may also bid, usually in an effort to keep the prices up, but may bid no more than is owed. If no one else bids, the property reverts to the lender.

The buyer of a foreclosed property receives the property free of the mortgage and all junior liens, but not prior liens. Note that any property taxes must be paid out of the proceeds of the sale.

It is extremely important to note that the borrower is personally responsible for the loan, so the lender can sue for the shortfall if the proceeds of the sale do not cover the amount due the lender. If the lender wishes to do this, he must file a motion for a Deficiency Judgment with the court within 90 days of the date of sale.

 However, the lender can only obtain a Deficiency Judgment if the fair market value at the time of the foreclosure sale is less than the amount owed the lender. The court will determine the market value of the property and award whichever is greater - the market value or the sales price, to the lender.

The entire process can take from 12-18 months or longer and can be nerve wracking and drawn-out , but this also allows the opportunity provided with time for the homeowner/borrower to come up with the means of redeeming the property - by paying in full all back monies owed, including the back interest and costs of the foreclosure action.

The borrower has this right until the moment of sale. After that he loses this right of redemption.

Part 2 will cover options for a homeowner facing foreclosure.

Should you have any questions, need more information or help with a particular situation you may contact Raymond Narayan by email at raynalnar4@yahoo.co.uk  I am always available to anyone who needs help.  

 Additionally you may visit my websites : www.bestnyhomesdaily.com or www.bestqueens-brooklynhomes.com