Know What Is A Foreclosure And How Does It Work?
Buying a house in pre foreclosure can seem very simple. Who could pass up a minimum price for a new home? But… is it really a good price? Is the final price I pay what it ultimately costs to buy a foreclosure?
Everything you must keep in mind in order not to lose money, we will tell you here:
Thinking of Buying Foreclosure?
Banks own real estate because the banks have acquired the homes through pre foreclosure homes. The houses on a bank’s books are called REOs, which is an acronym for “real estate ownership.”
Keep in mind that when banks receive deeds to homes through foreclosure, it is often because no one showed up in court to bid the minimum amount of the existing mortgage, or the bank He purposely set a floor price so high that no one would touch it.
At first glance, it may appear that pre foreclosure houses are unprofitable, especially if the bank wants to sell its inventory on the open market for the amount that the previous mortgagor once owed the bank.
What Is A Foreclosure?
A foreclosure or mortgage action, in procedural law, is an executive procedure through which the sale of a real estate that was encumbered with a mortgage is ordered, due to the debtor’s breach of the obligations guaranteed with the mortgage.
That is, if you contracted a home equity loan, to buy your house and there comes a time when you do not pay several mortgage installments, the bank can resolve the loan and judicially foreclose so that the house is sold and recovered. the money you owe him.
Steps Of A Foreclosure
Before starting the legal procedure to execute the mortgage, the bank, in the event of non-payment of the instalments by the mortgaged party, will claim the payment out of court.
After some time without the debt being paid, the buying a pre foreclosure home procedure begins, which has the following steps:
1. Lawsuit For Foreclosure
The financial institution will file a claim against the debtor before the Courts of First Instance of the place where the mortgaged real estate is located. In order for the bank to give up all the debt and claim it from the client through the courts, there must be a delay in payment of more than 3 months.
2. Notification Of The Claim To The Debtor
Once the claim is filed and admitted for processing by the corresponding Court, the debtor will be notified and the debt will be claimed again.
Opposition to execution
The debtor has a possibility of defense through the foreclosure incident, although it occurs in very specific cases, such as when there are abusive clauses in the mortgage loan.
3. Judicial Auction
The debtor can stop the auction until the day it is held by paying the entire debt. If the debtor does not pay the property, it will be auctioned for the value established in the mortgage deed for auction purposes. In the auction what usually happens is that the real estate is awarded to the bank.
4. Defendant Release
After the award of the real estate in the auction, the launch will be held on the date and time indicated. On the launch day, the debtor must abandon the property unless an extension has been granted due to being in a particularly vulnerable situation.
Faced with an unpaid situation, it is better to avoid foreclosure, try to reach some kind of agreement with the bank to prevent the procedure from starting and the debt from increasing. For this, the most advisable thing is to seek specialized legal advice and ask all the doubts you have to know your rights and obligations.