Lisa Simpson
Aug 8,2008
In: pre foreclosure

Pre-Foreclosures

Unfortunately more and more Americans are losing their houses to foreclosure with each passing day. Till yesterday the word “foreclosure” remained within the limited world of mortgages. But today the word is making the rounds and negatively speaking it is the most notorious. Even if people do not understand what it is – everyone knows that there is an ogre out there waiting to gobble up the unwary.

To know about pre-foreclosure it is necessary to understand foreclosures. The foreclosure is a judicial process that consists of many stages. The lender initiates it when the borrower fails to be regular in making mortgage payments. A notice is sent to the borrower warning of foreclosures. This is the pre-foreclosure stage. Thus the lender files a default notice seeking the permission of the court to sell the property and realize unpaid dues. This notice starts off the foreclosure process and it is said that the unit officially enters into the pre-foreclosure stage.

Technically speaking the pre-foreclosure stage is a grace period – a time being allowed by the lender to the borrower to try and get finances in order. In pre-foreclosure the borrower is warned that if dues are not paid the house will be sold off at a court auction. In the pre-foreclosure stage the lender cannot take back the unit or sell it. During the pre-foreclosure period the borrower has the advantage so far as the house is concerned.

How long does this pre-foreclosure stage last? The period of the pre-foreclosure stage differs from one state to another. Some states allow the pre-foreclosure period to go on for even 6 months while in other states the pre-foreclosure stage is very short, hardly allowing any breathing time for the borrower.

After the property enters the pre-foreclosure stage there are many options left for the borrower to avoid foreclosure. If the house owner manages to arrange money and pay off dues then the unit is taken off the pre-foreclosure stage. A small amount of dues can be managed but if it is too large then the best option is to sell the house while it is in pre-foreclosure. Potential buyers are more interested in houses that are in pre-foreclosure than houses already in foreclosure. This is because the owner, being directly connected with the pre-foreclosure house, will take care of it and not damage it as in the case of the foreclosed units where the foreclosed victims suffer from rage and frustration.