At any time any foreclosure case is registered, a structured process follows. In a judicial state, foreclosure begins as it is filed; in a non-judicial system, foreclosure begins once the Notice of Trustee Sales or the Notice of Default is filed. The beginning marks the pre-foreclosure stage, or the preparation before the actual handling of the case -the time when you can make the most money out of the case.
Order a Trustee Sale Guarantee, otherwise known as the TSG -this is just another name for a Trustee Report.
Several notices are sent out, one to each individual with beneficial interests or rights to the real property being foreclosed.-This includes everyone with a lien on the property, for instance anyone with a second mortgage, and yes, this includes the IRS.
Substitution of trustee: In a non-judicial state, there is always a Substitution of Trustee. This stems from the three tiered approach, which consists of:
The Trustor, or the person who borrowed the money, The Trustee, the beneficiary, The Trustee, who handles all the transaction pertinent to foreclosure
You may see a Substitution of Trustee posted at the County Recorder’s Office. This trustee only handles foreclosures and will follow the process to the end.
The Posting of Legal Notices -As required by law, as the affair concerns land and property, it should be made public through a legal notice. This notice contains only the information valid for public consumption; in other words, nothing that might be detrimental to the case or the parties involved. The notice appears on newspapers, publications, even special county-owned legal publications, and on the site of the property itself.
Maintain continual contact: Continual contact is maintained with the title company to make sure no other liens are attached to the property. One thing that can stop the whole process is bankruptcy. Bankruptcy is a federal filing lawsuit that supersedes state statute.
The Credit Bid -The credit bid is the set price when auctioning off the property. This is usually prepared by the mortgagee, or the beneficiary.
As dictated by state law, the credit bid is determined by the principal balance plus arrears:
Other arrearages can include second mortgages and homeowner’s association fees. In a judicial state, the lawyer for the mortgage company/bank will prepare the credit bid. In a non-judicial, the Trustee will prepare the bid.
Payment -this includes reinstating the loan. This is done by the owner of the property. Canceling or suspending the sale at anytime -Done by the mortgagee or beneficiary, but arrangements should be made with the owner beforehand.
The Notice of Trustee Sale. This contains the time and place of the auction. This should also contain the proper legal descriptions of the property -which can be obtained at the County Tax Assessor’s Office. Take care to be sure that the description matches the actual address; it should be up-to-date, as addresses change overtime.
The Due on sale clause. This is a part of the mortgage that demand full payment of the loan, should the house be sold or transferred. The lender has no power to halt the sale, but can legally demand for full payment -which, in the lender’s case, has the same financial effect.
If there is no specified due on sale clause, then the loan will be assumable -even if the lender does not give their due consent. In the same way, older FHA loans and older VA loans are assumable even if the lender does not give consent. You may be asking now: what considerable effect will this have on the selling of a foreclosed property? The effect is simple and very beneficial. The bank will most likely be not privy to the transfer, provided you are up-to-date on payments as you acquire the warranty deed at the timeframe of pre-foreclosure. You can buy the property, and then sell it as soon as you can or even later on. You can then pay off any remaining deficiencies in your loan easily and in the required timeframe.
