Friday, February 5, 2016
Realtor 101: Foreclosures, REO's & Short Sales

Foreclosure & Bank Owned Property

Simply, foreclosure is the process by which a homeowner’s rights to a property are forfeited because of failure to pay the mortgage. If the owner cannot pay off the outstanding debt or sell it via short sale, the property then goes to a foreclosure auction. If the property does not sell at auction, it becomes the property of the lending institution.

It helps to remember that the word “homeowner” in this case is actually a misnomer – they are actually borrowers. When someone buys a home, they sign a thick packet of papers – one of which is the mortgage, or deed of trust. This document puts a lien on the purchased property, making the loan a “secured loan.”

When a lender loans you money without any collateral (credit card debt, for instance), it can take you to court for failure to pay, but it can be very hard to collect money from you. Lenders often sell this sort of debt to outside collection agencies for pennies on the dollar and write off the loss. This is considered an “unsecured loan.”

A secured loan is different because, although the lender may take a loss on the loan if you default, it will recover a larger portion of the debt by seizing and selling your property.

For all the latest foreclosures in Orlando and the surrounding areas of Central Florida click here:
http://www.dudleyeliterealty.com/fl/foreclosures/


Real estate owned or REO

Real estate owned or REO is a term used in the United States to describe a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosureauction. A foreclosing beneficiary will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the beneficiary will legally repossess the property. This is commonly the case when the amount owed on the home is higher than the current market value of this foreclosure property, such as with a high loan-to-value mortgage following a real estate bubble. As soon as the beneficiary repossesses the property it is listed on their books as REO and categorized as an asset.

For all the latest foreclosures in Orlando and the surrounding areas of Central Florida click here:
http://www.dudleyeliterealty.com/fl/reo/


Short Sale

A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens' full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any shortfalls on the loans, unless specifically agreed to between the parties

A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower. Both often result in a negative credit report against the property owner.

For all the latest Short Sales in Orlando and the surrounding areas of Central Florida click here:
http://www.dudleyeliterealty.com/fl/short-sales/

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