Foreclosure Procedures

What Are The Foreclosure Procedures And Process

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On What Are The Foreclosure Procedures And Process Was UPDATED And PUBLISHED On July 2nd, 2020

The government’s position with lending, traditionally, is they are set to ensure there is a 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 categories (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

In this article, we will discuss and cover What Are The Foreclosure Procedures And Process.

Foreclosure Procedures

Foreclosure Procedures And Process

Many states have strict foreclosure rules.

Foreclosure procedures in the United States are divided into two categories:

  • Judicial
  • Trustee

Some states use both, some pick one:

  • If you live in a judicial state, as I do in Illinois, then 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, the 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(the date that foreclosure is finalized with the court or trustee, the eviction process depends on the state, and sometimes the 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 trying to stay in their home
  • The longer process costs the lender more money

But most of all depress the market for a longer period of time.

Qualifying For Mortgage After Foreclosure

What does the timeline on foreclosure procedures mean?

Gustan Cho Associates Mortgage Group represents a national direct lender with no mortgage overlays on government and conventional loans. We do not have a second tier of lending guidelines, called overlays. For borrowers who have already left the house vacant, this also has a negative effect 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, let’s 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 lieu 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 professionals to go over 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 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.

Ron Granado

Account Executive | Plymouth Title Guaranty Corp

1301 W. 22nd Street | Ste 505 | Oak Brook, IL 60523


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