Lending And Foreclosure Procedures
The government’s position with lending, traditionally, is they are set to ensure there is warehouse for lending on the secondary, and that there are programs available for low to moderate income families, as well as low to moderate income areas. What they became, after the real estate meltdown and credit crash of 2008, was the end all be all of residential lending. At one time, Fannie Mae, Freddie Mac, and FHA accounted for 4/5ths of the market. This kept mortgage rates low, as Uncle Sam now chooses to back long term interest rates. What it also did is to minimize non traditional lending and Alternative non prime lending to a minimum. As the foreclosure inventory grew, and turn times for taking those properties(non performing assets) slowed at the same time, banks and credit unions not in the big seven category (Chase, Bank Of America, Wells Fargo, U.S. Bank, Suntrust, Fifth Third, and Citibank) took a seat in the viewing section for a couple of years. Volume fell, as these banks market share only grew. Less lenders-less options, slower service, higher fees, you get the picture.
Many states have strict foreclosure rules. Foreclosure procedures in the United States is divided into two categories: Judicial and Trustee. Some states use both, some pick one. If you live in a judicial state, like I do in Illinois, then your foreclosure has to be approved by a judge before it can be handled by the County Sheriff’s department. If you live in a non judicial state such as the Golden State, your case gets looked at by a Trustee. The lender cannot come after you in a trustee sale for a deficiency unlike in a judicial one.
Timeline On Foreclosure Procedures
The time period for foreclosure procedures differs from state to state. New York has an average process to sale date(date that foreclosure is finalized with court or trustee, eviction process depends on state, and sometimes time of year) of 445 days, whereas Texas, which is trustee mostly, takes 27 days. The slower process has its benefits, in particular for the ones try to stay in their home. The longer process costs the lender more money, but most of all, depresses the market for a longer period of time.
Qualifying For Mortgage After Foreclosure
For borrowers who have already left the house vacant, this also has a negative affect if they are looking to rebound on their credit. It takes a minimum of 3 years after foreclosure case is closed with the court or trustee. The waiting period starts from the recorded date of the foreclosure and not the date the keys were turned in. If the process is taking longer than average, lets say 3-5 years, then the borrower may have to wait up to 8 years before they can apply for an FHA loan, and 10 years before they can apply for a Fannie Mae/Freddie Mac loan.
For these reasons keep the following three things in mind: consult a legal professional to go over your options(modification, deed in iieu of foreclosure, foreclosure delay, bankruptcy). Consult a realtor to see if you can sell the house and or be able to rent in the area for a smaller monthly amount. Finally speak to loan professional to go over your options in regards to refinance(HARP), or realistic time frame as to how long you will have to wait to buy again(if you even want to) or what you can do to fix your credit.
This article was written by Ronald Granado of Plymouth Title Guaranty Corp. Mr. Ron Granado is a national expert in real estate, credit, and mortgage regulations and many real estate professionals request Mr. Granado’s expertise. We are honored to have Mr. Ron Granado to be our guest writer for Gustan Cho Associates.
More from Gustan Cho
The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.