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.

Many states have strict foreclosure rules.

The time period for foreclosure procedures differs from state to state.

For these reasons keep the following three things in mind:

How Long Does Foreclosure Process Take

The Foreclosure Process is a long process and does not happen overnight.

• The good news is those home buyers can qualify for home loans after the foreclosure process
• In order to qualify for mortgage loans after the foreclosure process, the foreclosure needs to have been finalized
• There are waiting period after foreclosure and/or another housing event with government loans and conventional loans
• However, Gustan Cho Associates is a national lender with no lender overlays on government and conventional loans
• Gustan Cho Associates has a special alternative financing loan program called NON-QM Loans
• There is no waiting period after foreclosure, deed in lieu of foreclosure, short-sale with non-QM loans
• Home Buyers can qualify for NON-QM Loans one day after foreclosure. 20% down payment is required

Non-QM loans have mortgage rates that are higher than government and conventional loans.

How Does The Foreclosure Process Work?

When a homeowner cannot make his or her mortgage payments and defaults on his or her agreement to make timely mortgage payments, a foreclosure will occur and the foreclosure process will be initiated by the lender.

• The ultimate outcome from the foreclosure process is the subject property being taken over by the mortgage lender and sold
• Most Lenders do not want to take the property back 

Depending on the lender, they may offer the homeowner the following:

• Short Sale
• Deed In Lieu Of Foreclosure
• Loan Modification

Foreclosure Process and Proceeding will not start until the borrower is 120 days behind their mortgage payments.

First Stage Of Foreclosure Process

The foreclosure process takes months if not over a year. Possibly years depending on the geographical region the property is located and the laws of the state of the subject property. It also depends on the mortgage lender.

• When a borrower falls behind on their mortgage payment and cannot come into a repayment plan with their lender, the lender will initiate foreclosure proceedings
• This normally does not happen unless the homeowner is at least four or more months behind
• The lender will give the homeowner an opportunity to pay the payments that have been behind
• The lender may offer the homeowner to enter into a payment plan
• Homeowners can negotiate with their lenders and make payment arrangements

However, for those homeowners who have lost their businesses or lost their jobs and cannot gain employment and have no family members to bail them out, their options are limited.

Foreclosure Timeline

For those homeowners that cannot enter into a repayment agreement with the lender, the mortgage lender will start the foreclosure process.

• The first stage of the foreclosure process happens if the homeowner has missed at least four monthly payments
• Sometimes the foreclosure process is not initiated until six or more months after the first missed payment
• The lender will request the appointment of a trustee to record a NOD, which is a Notice of Default
• This is recorded at the County Recorder of Deeds Office in which the subject property is located at
• The foreclosure process will give the homeowner notice once this is filed and this is when the official reinstatement period starts

The reinstatement period normally is good until a week or so prior to the subject property being auctioned off at a sheriff’s sale.

Foreclosure Proceedings

In the event, if the mortgage default is not brought current within three months, the courts will issue a foreclosure date for the sale of the subject property.

• The borrower will be receiving a notice of sale notice

The notice of sale notice will also be posted on the subject property and will eventually be published in various local newspapers for a period of several weeks.

Trustee Sale During Foreclosure Process

A designated date, time, and location will be published through the publication of the notice of sale for the foreclosure trustee sale.  It is normally held at a county site where the subject property is located at.

• The sale is an auction and will be auctioned off as a public auction and offered to the highest bidder
• The winning bidder needs to have a certain percentage of cash down payment and needs to come up with the balance within the next 24 or 48 hours or he or she will lose the initial cash deposit

The winning property bidder will then get the rights and ownership of the foreclosed property via trustees deed to the foreclosed property.

Foreclosure Bidding Auction Process Of Subject Property

The opening bid price for the subject property is set by the mortgage lender who owns the foreclosed property.

• The opening bid is normally the balance of the mortgage balance of the subject property along with the accrued interest, attorney costs, and other fees the mortgage lender has accrued
• In the event, if there are no bidders for the property, the property will be bought by the lender’s representative which is normally an attorney
• Many times, the lender will purchase the property back and will hold it as their asset for future resale
• This is often called Real Estate Owned, often referred to as an REO property
• When a foreclosed property is auctioned off at the sheriff’s sale whether, by a public bidder or the lender, all secondary and junior liens are expunged

For those purchasing Real Estate Owned properties, REO, by a lender, will get a clean title to the property with no secondary or junior liens attached to the title.

Qualifying For Mortgage After Foreclosure With NO Waiting Period After Housing Event

Home Buyers can qualify for mortgage home loans after the following:

• Foreclosure
• Deed In Lieu Of Foreclosure
• Short Sale
• Loan Modification

There is a mandatory waiting period to qualify for government and conventional loans after bankruptcy and housing event.

• However, NON-QM Loans are portfolio loans offered by Gustan Cho Associates with no waiting period after foreclosure, deed in lieu of foreclosure, and short sale
• There is a one-year waiting period to qualify for NON-QM Loans after Chapter 7 Bankruptcy discharged date
• NON-QM Loans require 10% to 20% down payment
• Mortgage Rates are higher than government and conventional loans
• NON-QM Loans are normally used as bridge loans until borrowers qualify for traditional government and conventional loans

Home Buyers who have a foreclosure or other housing event and need to qualify for a home loan with a direct lender with no overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.