FAQ

A foreclosure is a legal process in which a bank, mortgage company or other secured creditor sells or repossesses a home or other type of real estate property due to non-payment of a mortgage or from a specific default of a mortgage note. In most cases with residential real estate being homes in specific, an owner is behind on the mortgage and the bank or lender repossesses the home.

REO stands for "Real Estate Owned" and is commonly used by banks to identify there properties that they have taken back and that they have in inventory as foreclosure homes (properties). You will also hear REO Foreclosures as an extension of the terminology to describe a foreclosed home owned by a bank or lender.  At NoForeclosure in our "Foreclosure Search" section, we reference the term "Bank Owned" to indentify the REO properties.

A Pre-Foreclosure is a home (property) that has been posted by a bank or lending institution at the court house to publicly notify all parties that per the deed that the owner signed they are planning on re-possessing their property if they do not cure the default requirement (in most cases make up the back payments owed to the bank).

A pre-foreclosure home may or may not be actively listed for sale.  At the NoForeclosure web site under: Foreclosure Search > Pre-foreclosure > Property Detail tab it has the detailed information about the particular property from public records we pulled data from at the County.  As a Agent we do not solicit these owners independently based on buyer inquiries.  We do solicit pre-foreclosure owners as a group to assist them with loan modification options and or options to provide them with a list of our qualified buyers.  When we do receive solicitation from owners that are in pre-foreclosure, we will post them on our site.

We are the only foreclosure site that offers our potential user-buyers the ability to check a pre-foreclosure property with our exclusive search feature at the bottom of the pre-foreclosure property detail page.  With this feature you can scroll down > hit search and you will your screen will pull up that this is not an active property –or– if the pre-foreclosure property is “active” for sale in the MLS then after you hit search a pop-up will appear that has a full display of the property actively for sale.

We do not claim to have a complete list of all homes that are posted for foreclosure (pre-foreclosure home), so if you are a seller checking our site to see if your home is posted at the court house for foreclosure, please check with the county as we do not guarantee out site to include all listings. There are also professional services available for you to contact that provide this service depending on your state and county.

A short sale is when a homeowner owes to a bank or lending institution more than the value of the home and the bank agrees to sell the property for less than is owed. For example, if your outstanding mortgage balance is $250,000 but your home is only worth $200,000 then you are upside-down and may be able to do a short sale so you can sell the property and the bank can be paid off. If the banks payoff is less and they accept the lower balance this constitutes a short sale.

This is important, and approved short sale is when the owner has made a formal application to the bank providing the bank with a letter to the bank (hardship letter) explaining why they cannot make the payments along with supporting financial information so the bank can approve the borrower/owner for a short sale. This is step one in the approval process, step two is that the bank will also need to approve the value of the property to determine what the actual selling price of the property can be sold for. When purchasing it is important to know what stage of the approval that the home is in. To obtain a approval for the owner and for the home value this can take from a month to several months. Many buyers have waited for three to six months for a property to be approved. The knowledge of your agent representing you is important in this process.

If a property is advertised and or marketed as a short sale it can also be a pre-foreclosure.  Many properties that are short sales have not been posted by the bank or lender for an upcoming foreclosure. The seller could just be upside down on the mortgage and not be able to continue to make payments, so in this instance as an example they would start the short sale process before they are behind on payments. 

1. Pre-foreclosure: A Pre-foreclosure begins when a borrower becomes delinquent and can no longer make payments. It is the period of time between when a lender publicly files-posts a foreclosure notice of default or lis pendens and ends at a sheriff or trustee auction sale. During this period of time the property owner will have a chance to a partial or full payment to the lender or sell the property and pay it off. If the property is sold during this stage the owner can avoid having a defaulted loan on their credit history. Just because a property is posted for foreclosure does not mean that the lender will take it back, the lender will in many instances work with the buyer to extend the foreclosure.
2. Foreclosure Auction Sale: A Foreclosure auction takes place takes place at a public auction after the pre-foreclosure process has ended. Foreclosed properties are sold at public auction to the highest bidder. Depending on Foreclosure law auction sales are generally held at the county courthouse or a trustee’s office. The opening bid at an auction sale is based on the total amount owed to the foreclosing lender, interest incurred, late charges, penalties, outstanding liens, and fees incurred because of the foreclosure proceedings. In most states properties purchased at auction generally have to be paid with cash or a cashiers check on the day of the auction. In some states bidders are required to bring a percentage of the bid amount to the auction and can pay the balance at an agreed to future date. In other states you could be required to pay the entire balance of the agreed to price the same day of the auction with certified funds. The auction sale is the most difficult way to purchase property. Buyers should also check the title for liens that can be attached to the property. There have been many buyers purchase property at auctions only to find out that there is an attached lien that can cost the buyer thousands of dollars to settle prior to re-selling the property.
3. REO Real Estate Owned: A REO is the terminology used by lenders for property that they have taken back by repossession and is now a foreclosed property owned by the lender. If the property sells on the auction then the property is transferred to the new buyer from the lender. When the property is taken back by the lender it is placed for sale sometimes from the banks own sales department in charge of selling there REO or in most case from a network of real estate agents who help the lender dispose of the properties through MLS, Auctions, or other means of distribution. This is the easiest type of foreclosure to purchase if you find a knowledgeable real estate agent to represent you as a buyer’s agent.

A recent inquiry from a seller that was behind on their payments asked "since my home is not listed on noforeclosure.com in the pre-foreclosure section does that mean that we are not posted for foreclosure" , and our answer was this: Just because your home is not listed on our site that does not mean that it is not posted for foreclosure.  You would have been given notices from a law firm that was acting as the trustee for your mortgage lender, and the best way to find out is to contact the trustee and or your lender to ask if it is scheduled for foreclosure.  We do not claim to capture all of the pre-foreclosure information at the court house, there are services that provide complete lists of all postings and depending on the state and city you are located in we always recommend to the serious investor looking to buy at the court house steps to go to one of those companies and ge the complete list.  Most of this information is available online now but it is time consuming to pull all the data, and we do not guarantee our information to be complete.  We try to obtain as much as possible, but in some markets we might do as little as 10% of the total postings and as much as 80%.  In many counties today you can go online and find it from the county online, just put in your google search browser " (name of county) county foreclosure postings " and you should come up with a link like the one in Collin County Clerks Office at http://public1.co.collin.tx.us/ccclerks_notices/default.aspx .  We reproduce and post public information on our web site, and each posting should be checked for accuracy.