Bank foreclosures are on the rise due to current economics in the United States. Banks foreclose on homes when the homeowner is unable to make monthly mortgage payments. In some cases, bank foreclosures can be completed in as few as 51 days from the past due payment. However, bank foreclosures are usually completed within 90 to 120 days from the first past due payment.
Bank foreclosures are also referred to as real estate owned (REO) foreclosures. REO properties can occasionally be sold through a process known as pre-foreclosure or short sale. Selling during pre-foreclosure can help the homeowner save their credit rating and reduce expenses for the lender. When there is equity in the mortgaged property, the homeowner is oftentimes willing to negotiate a lower selling price to keep their home from foreclosure and their credit intact.

When there is no equity in the real estate or the home has negative equity, the bank may be willing to allow for a short sale of the home. A short sale gives the homeowner the opportunity to sell the house at a lower price than is owed on the mortgage note. There are two types of short sales used during bank foreclosures. A deficiency judgment short sale requires the homeowner to repay the difference between the mortgage amount and selling price. For example, if the mortgage amount is $100,000 and the property sells for $80,000, the homeowner is responsible for the remaining $20,000 balance.

The second short sale option is referred to as Payment in Full without Pursuit of Deficiency Judgment. With this option, the lender agrees to accept the selling amount and the homeowner is not required to repay the difference. It’s important to note, the Internal Revenue Service may consider this difference as capital gains and charge tax on the amount. Foreclosure real estate costs the bank money. The properties have taxes, maintenance fees and insurance which must be paid. Banks want to make money. When they have foreclosed homes, lenders lose money each day the home remains unsold.

Bank foreclosures are stressful for the homeowner as well as the loss mitigator. A bank loss mitigator’s job is to assess and minimize the loss the bank will take on a foreclosure. Once your property is in foreclosure, you will work with a loss mitigator to determine which action is best for you and the bank. The bank does not want to foreclose on your home. Foreclosure is a last resort when mortgage payments or other arrangements cannot be met.

Bank foreclosures can be a very stressful and embarrassing event for an homeowner. Private real estate investors can often purchase your home and save your credit. They can offer a solution before it is too late. However, you must obtain short sale approval from your lender prior to selling it for a lesser amount than owed on your mortgage note.
Author:  Simon Volkov
Source http://www.submissionlist.com