5 Myths Regarding Foreclosures

 

Myth 1:  Foreclosure Happens Fast

  • The Obama Administrations Home Affordable programs have been more effective in extending foreclosure proceedings for homeowners than actually preventing foreclosures.
  • JP Morgan Chase reports a 14 month national average for non-payments of citizens who have lost homes to foreclosure.
  • The bottom line is that foreclosure does not happen fast, whether it is to save banks the cost of owning and maintaining homes or if it is just to give a family down on their luck some extra time to get back on their feet, the process can take months.

Myth 2: Buyers Are Not Able To Get Clear Title or Title Insurance on Foreclosed Homes

  • Purchasers of bank-owned properties in nearly every jurisdiction are protected from later title attacks by foreclosed homeowners by the purchaser rule.
    • Under which courts would prefer to simply award cash damages to be paid by the culpable bank rather than reversing the sale.
  • Title insurers have restarted issuing insurance policies on bank owned homes when protect buyers’ interest.
    • This came after banks agreed to take responsibility in the event a former homeowner prevails in a wrongful foreclosure suit.

Myth 3: Buyers Should Wait for the Shadow Inventory to be Released

  • Banks are avoiding flooding the market with all of the foreclosed homes and driving values further down.
  • For this reason buyers should not expect to see a massive influx of these shadow homes on the market anytime soon – if ever.  Banks will replace what they have sold and no more.
  • Instead buyers should set up notifications (Try – www.SoTahoe.com) with your home requirements and be ready to call your agent and view the homes you think would be a good fit.

Myth 4: If You’re Looking for a Deal, You Should Be Looking for a Foreclosure

  • Individual sellers are quite motivated and aware that they are competing with discounted short sales and foreclosed homes.
  • Individual owners are also much more negotiable with things like:
    • Repairs
    • Closing Dates
    • Choice of escrow provider
    • Closing Costs
    • Included personal property
  • Individually – owned homes are generally more pristine and in move in condition.
  • Just be clear on what you can afford and don’t discriminate against non-foreclosures.

Myth 5: Having a Foreclosure On Your Credit History Means It Will Take Years and Years Before You Can Qualify to Buy Another Property

  • Foreclosure usually will ding 100-150 points off your credit score.
  • To buy again make sure you have no late payments (Credit, utility, exc.) and it’s in your best interest to document 12 to 24 months of on time rent payments.
  • Your debt-to-income ratio will need to be lower than a borrower who has not had a foreclosure.
    • This is protecting the borrower from over extending themselves.
  • Bank will want proof that you have two years of continuous employment history in the same field.
  • Documentation that you meet other loan qualification requirements.
  • With all your ducks in a row it is possible to obtain a new home loan after three years.

 

South Lake Tahoe Foreclosure’s

This information is deemed reliable, but not guaranteed.                                                                                                

Resource: Written By Tara-Nicholle Nelson | Broker in San Francisco, CA – Staff for Trulia.com http://www.trulia.com/blog/taranelson/2010/11/5_more_foreclosure_myths_-_busted?ecampaign=cnews201011B&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2010%2F11%2F5_more_foreclosure_myths_-_busted