You might be buying a house that was foreclosed ? and not even know it.
Because a home goes into foreclosure does not automatically mean it is going up for a public auction or sale. An auction isn?t necessarily even the most effective way for a bank or lending agency to get its money back.
“You can have an auction for a variety of reasons,” said James Ballentine, director of housing at the American Bankers Association. “It can happen for not paying taxes or for a house in foreclosure. But instead of an auction, the house could appear as a regular listing. The lender always tries to sell the house as if it was selling a house period. Buyers may not even know the property was a foreclosed unless its price was undervalued.”
Statewide, foreclosures are on the rise. Maryland is ranked 28 nationally in foreclosures by RealtyTrac Inc. For the month of April, there were 487 Notice of Defaults issued.
But before those notices go out, borrowers have had several chances to make good.
A failure to meet any payment deadline within 30 days can hurt credit scores. Lenders might even inform a credit bureau without notifying a resident if there is a failure to pay on time. After 90 more days, lenders can file a Notice of Default, which gives the borrower 90 more days to make up the delinquent payments, said Liz Pulliam Weston, a housing expert for MSNmoney.com.
If payments are still not made up after this point, then a Notice of Sale will be issued, with a sale date set for the house over the next 15 to 30 days.
To halt this process, Weston offers tips such as setting up a short-term payment plan, adding the unpaid balance to the loan?s principal and being sure to clearly communicate with the lender. She even states that a foreclosure can even be halted temporarily by filing a lawsuit or for bankruptcy.
“It can become a drawn out procedure because the borrower has the right to appeal and attempt to work out payments,” Ballentine said.
