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By Dave Jackson
Is it possible for someone to take over your payments and you avoid foreclosure? There are several problems that arise which make it difficult, unless the person taking over the payments is a family member who doesn’t mind doing the favor of making your payments. The mortgage contract was made between you and the lender and there isn’t a way for you to simply let someone take over payments and get you off the hook. However, before foreclosure if someone buys the home from you, there might be a way for the mortgage company to pay off your portion and create a new mortgage with the new party.
Foreclosure is worse then bankruptcy because you are actually losing something of value, your home. It usually takes 110-120 days or more for the foreclosure process to be completed. Most loan documents (Deed of Trust) have a power of sale clause authorizing the lender to conduct a foreclosure auction to sell the defaulted borrower’s property. If there is no cure of the default, a Notice of Foreclosure Sale (NFS) is recorded. You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale or exchange.
Property in foreclosure is often referred to as distressed property because the owner is in financial distress and has usually missed several mortgage payments. Distressed assets (such as foreclosed property or equipment) are considered by some to be worthwhile investments because the bank or mortgage company is not motivated to sell the property for more than is pledged against it. These properties are usually priced below market and you get to inspect the property and can usually finance the property through the bank that did the foreclosure.
Mortgage lenders typically lose money when they foreclose, since most foreclosed homes are worth less than the value of the mortgage. The mortgage holder can usually initiate foreclosure anytime after a default on the mortgage. Under strict foreclosure, when a mortgagor defaults, a court orders the mortgagor to pay the mortgage within a certain period of time. Virtually all mortgages today have acceleration clauses.
Bidding at a foreclosure sale can be VERY tricky. Obviously, no lender will be interested in doing a Short Sale as long as the borrower is just one or two installments behind on payments. Last, but certainly not least, is the fact that you must pay all cash at most foreclosure sales. If you have not left the property after the law date or sale of the property, the court will allow the bank to have a marshal move you out.
Foreclosure is worse because of the loss of value – over a short time. Foreclosure is NOT a single event, but a legal process that takes time. When the foreclosure is completed, the derogatory record can stay in your credit reports for up to 10 years.
About the Author: Interested in more? Visit Dave as he writes about foreclosure and how you can survive at When is Foreclosure.
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