What is a Foreclosure Property ?

What is a Foreclosure Property?

     A foreclosure sale, or sheriff sale, is the final step in the legal process involving a default on real estate.  Most foreclosures are mortgage related and occur when the homeowner falls delinquent on their mortgage payments and cannot get back on track with the mortgage lender.   There are foreclosure sales that are brought as a result of delinquent taxes, municipal liens or even homeowners association dues, however, we will be focusing mostly on the mortgage lender foreclosed homes with this article.   

How does the Foreclosure Process Start?

     The foreclosure process starts when the mortgage lender files a lawsuit in the courthouse against the homeowners for non payment.  This is the first notice the homeowner receives that the property is being foreclosed upon.  The homeowner has all control over the property at this time and throughout the process until the actual sheriff sale takes place.  The homeowner can bring their payments current with the lender, work out payment arrangements with their lender, or consult an attorney for legal advice to stop the foreclosure process.  

What happens at the Sheriff Sale? 

     After the property has been through the pre-sheriff sale process and the homeowners have not worked out arrangements to postpone or stop the sheriff sale, the property is put up for auction by the Sheriff's Office.  The sheriff's office will read all properties up for sale just prior to the auction and the minimum amount required to purchase.  Each property will be auctioned and if no bidders sufficient enough to cover the minimum amount, it becomes the property of the lender who started the foreclosure proceedings.  If there is a successful bidder, immediately upon sale 10% is due in cash or certified check by the buyer and the balance is due within 10 days.  These are the terms in Montgomery County, PA. 

 What about the Debts of the Prior Owner?

     If a property is purchased at the Sheriff Sale directly, any debts that could be liened against the property may remain and be the responsibility of the new owner.  It is definitely advisable to research the debts you may be responsible to pay prior to bidding on any Sheriff Sale Auction.   Also, be aware that if the property is occupied by the former homeowner or renter, it is your responsibility as the new owner to evict them.

     If the property is returned back to the lender at the sheriff sale, they as the new owner are fully responsible to pay any remaining debts of the prior owner or to evict the prior homeowners.  When the lender puts the property up on the market, they can set whatever price they want to sell it. 

     When you as the new buyer purchase a bank foreclosed property, title insurance is imperative.  The title or abstract company will perform all of the research to be sure the bank has paid all of debts of the prior owner.  Through your payment of title insurance on the new purchase, the title company assumes the risk in case anything is missed and you are covered.

          Hope this Helps
          Kathleen McKinney, Realtor
          Real Estate Excel, Souderton
          Email - McKinney.Kathy@gmail.com
          Facebook - Montco Foreclosure Homes
          Website - www.kathymckinney.com