3 DIFFERENT WAYS TO BUY A FORECLOSURE AT ORANGE COUNTY CA REAL ESTATE:
1. PRE-FORECLOSURE “SHORT SALE”
When an Orange County CA property loan is in arrears for 30 days or more, lenders usually start the California non-judicial foreclosure process with filing and recording of a “Notice of Default”.
After start of the foreclosure, the homeowner might want to sell the property to avoid foreclosure and get out from under the mortgage debt.
In this pre-foreclosure “SHORT SALE”, the selling price of the house is usually less than what is owed to the lenders.
The proposed SHORT SALE contract terms must be carefully set forth in a written purchase and sale agreement and approved by the lenders and lien holders who would agree on terms of sale and debt forgiveness.
2. TRUSTEE AUCTION SALES AFTER NON-JUDICIAL FORECLOSURE
After the filing and recording of a “notice of default” (NOD), if the homeowner does not “SHORT SALE” the property, it is scheduled for trustee auction sale after foreclosure – to be sold to the highest bidder.
- “Notice of default” filing starts the process – usually 30 days after borrower is in default on home loan
- Notice of trustee sale can be recorded 3 months after recording Notice of Default
- Initial trustee auction can be scheduled and held just 20 days after Notice of Trustee sale
- Trustee auctions can be postponed for up to one year
- At Auction – transfer of property title to winning bidder who would pay all cash or its equivalent at that time.
- If no bid at auction is higher than lender’s opening bid, title to property is transferred to the lender, and property becomes REO lender owned.
3. REO BANK-OWNED AFTER FORECLOSURE
If the property does not sell to a third party at the public foreclosure auction, title is delivered to the lender that started the foreclosure – then to become an REO lender-owned property.
The foreclosing lender would then need to evict the prior distressed homeowner (if still living at the home) or renters, using CA law approved procedures, perform essential repairs and place the property on the market in the MLS for sale as an REO.
This is for information only and is not the providing of legal or tax services. Buyers of foreclosures should consult with a real estate attorney in their local area.
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