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Understanding Foreclosures

It is an unfortunate commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate “bonanza”, many people go to any lengths available to get into the market through investments in vacation homes, rental housing and trading up to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. It is possible that neither will occur and borrowers may be faced with large balloon payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner’s financial situation improves.

Let’s say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the county recorder’s office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before.

After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes on the block. At the sale, buyers must pay the amount of their bid in cash, cashier’s check or other instrument acceptable to the trustee. A lender may “credit bid” up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

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Pine Point Realty
1226 Lincoln Street
Rhinelander, WI 54501
Phone: 715-365-6000
 

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"When Our bank turned us down for our home loan, we felt that all hope was lost, but Carol Shattuck and Kathy Dolch came through with another lender that was able to get us into our first home." Terry H.
I had met with Kathy a month earlier to discuss my situation and possible sale of my home. Once I knew for sure that I was going to list, I was comfortable with Kathy's input, so I signed up with Pine Point. Julie H.
Kathy and her team go above and beyond to make sure your experience is amazing. Kathy was amazing and made sure we knew what we were looking at, and we should know, we have been working with her for 2 years to find the perfect home. M. Wilmot
As a first-time home owner, Kathy was excellent to work with! The home I purchased was a foreclosure and there were lots of hoops to jump through, but Kathy was very patient and optimistic. Deb H.
Ashlei Highfill was so patient and kind. She always answered every question we had right away. She really showed us some great properties and ultimately found us our perfect starter home. Would highly recommend Ashlei Highfill to anyone looking to purchase a home. Definitely will not be disappointed! Laina Miller , Rhinelander
We moved from out of state and were unable to look at homes in person and Ashlei went out of her way to look at homes for us, she took many pictures and was extremely honest with us, which was what I valued most. She was very punctual at getting back to me, and made my first home purchase an enjoyable one. Kempkens - Rhinelander
I trust Pine Point. Sharon worked well with us and kept us informed. Virginia Taft
My experience with Ashlei was beyond excellent. Her excellence in keeping me informed at all times was very important to me and she went above and beyond my expectations. She is most professional and advised me of her opinions when asked. I would definitely recommend Ashlei to friends, family, or associates who are in the market for a real estate professional. David Dohe
We want to thank and express our appreciation to Ashlei and Team Dolch for all the help and support through the process of buying our home. We've made new friends at Pine Point Realty!! C. McDonald
Ashlei was the greatest!! I could not have asked for a better, more genuine person to help us with our purchase. You have a wonderful agent on your hands! Al & Kathy Reinke
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