What is Preforeclosure?
Owning a house is supposed to be a dream come true, but it isn’t always easy. Houses are expensive. Maintaining them is a lot of work, and in a world full of unexpected issues and challenges, it can be easy to fall behind in housing payments. It’s a scary place to be, but falling behind a few payments doesn’t mean you’re going to be living on the streets. There are actions you can take and help you can receive when making payments becomes a challenge. One of the first things you need to understand in order to get good help is the process of preforeclosure. It’s your first warning sign that things are headed in a bad direction, but it by no means indicates that you are out of options.
The Quick Definition
Preforeclosure is the first step in the foreclosure process. A house in preforeclosure is not yet being repossessed or sold at auction. Instead, preforeclosure is the formal beginning to the process that can ultimately cause an owner to lose their home.
The Process
Preforeclosure begins with a written notice. The lender has to send a notice of default on the property to the borrower (usually by certified mail). This notice defines the state of the loan delinquency. It will also define the time the borrower has to rectify the situation before moving to the next step in the process.
The notice of default is also legally filed (usually with the county clerk) so that it becomes a matter of public record. This verifies that everything is proceeding legally. Ultimately, the public record protects the rights of both parties, but because the process is so visible, it can harm the reputation of the borrower. In particular, it can be bad for credit.
After the notice is received and filed, things will continue according to how the parties choose. The borrower can try to rectify the default through a number of different methods. The borrower can also stand by and let the foreclosure continue. In general, it can be assumed that the lender will pursue foreclosure unless they are given other alternatives by the borrower.
Rectifying Preforeclosure
If you’re facing preforeclosure and want a way out, you have three options. The first is to catch up on payments. Typically, anyone who has enough cash to catch up on payments doesn’t face this situation in the first place, but people are sometimes able to come up with extra money and get out of default. If you do this, you are no longer legally in preforeclosure, and the process has been stopped.
The second option is to negotiate with the lender. Notifications for late payments happen all the time. In almost every case, the lender would rather get money from you than foreclose on your house. Foreclosure is a long and frustrating prospect for lenders. A modification might allow you to catch up over installments. If you and the lender agree to a modification, it will create a new legally binding contract, and you can both move forward from there.
The third option is to sell the house. Assuming the house is worth more than the loan, it is entirely possible that you can sell it for more than you owe. You can escape the foreclosure, preserve your credit, and walk away with money in your pocket. The challenge is that you have to sell the house quickly. Once preforeclosure progresses to foreclosure, you can lose your window to sell.
If you want to look into option three, you should contact a real estate investor at Frank Buys Houses. This is a means to sell a house very quickly and have a guaranteed buyer. Just fill out the form, and the professionals will contact you to walk you through the rest of the process. You can get a cash offer with no commitment from you.