What is Pre-Foreclosure?
What is the pre-foreclosure stage?
Pre-foreclosure refers to a specific period of time early in the foreclosure process. Pre-foreclosure is when the property is in the infant stages of being repossessed by the bank. This period begins when the lender files a default notice on the property, effectively letting the borrower know that legal action will be pursued by the lender should the borrower not submit the delinquent payment.
During pre-foreclosure, the homeowner may still submit the delinquent payment in the allotted time in order to prevent the property from being foreclosed.
What Are a Homeowner’s Options During Pre-Foreclosure?
The pre-foreclosure period can last anywhere between 3-10 months. During this time, there are only a couple of options that homeowners have.
The most obvious option, which may not be the easiest, is to make any delinquent payments. This would also include any associated delinquency fees. Of course, this option would mean somehow acquiring a significant amount of money in a short period of time. In most cases, if the payments have gone unpaid long enough, this is a near impossible feat.
The second option would be for the homeowner to try to sell the property before the home goes into foreclosure. This kind of sale is known as a short sale. Short sales are a favorable option for all parties involved. The homeowner can save his credit score and be much better suited to find a new home, the bank/lender gets to transfer the mortgage to the buyer and save on the costs of foreclosure, and the buyer gets a great deal on a new home.
Short sales can be private arrangements between the buyer and the homeowner, so long as the buyer’s offer is approved by the bank before the sale is finalized. That makes it easy to find a buyer as investors who hunt for short sales are fairly easy to find.