REOs/Foreclosures/Bank-Owned
Posted on Nov 20 - Filed Under Featured
What is an REO?
REO stands for “Real Estate Owned”. An REO property is what lenders call properties they own following formal foreclosure proceedings against borrowers who have defaulted on their mortgages.
What is the process of foreclosure?
It begins when a homeowner missed making their mortgage payment, usually for 2 or 3 months. When this happens the lender may begin the foreclosure process. The decision to begin the foreclosure process is at the lender’s discretion and may vary. Once the lender has decided to begin the foreclosure process, the lender must file a 30-Day Notice of Intent to file a Notice of Default (NOD). This is a new law enacted by the State Senate (SB1137) in July of this year. It applies to owner-occupied residential properties sold between January 1, 2003 and December 31, 2007. After the 30 days have expired, the lender may file an official NOD. Lenders of residential properties that do not fall under SB 1137, may file an NOD after the first missed payment, this is also at the lenders discretion and may vary. The lender provides information on how to reinstate the loan and the homeowner has no less than 3 months from the NOD filing to do so.
If the home owner does not act by the end of three months after the filing of the NOD, the lender can proceed with teh foreclosure. The lender must publish a Notice of Trustee’s Sale, which is posted for 21-30 days. (The law requires lenders to post the sale for at least 20 days). The homeowner has a little over to bring their loan into good standing from the time an NOD is filed on their property. The homeowner may also, by law, bring their loan current until five days prior to the Trustee Sale. Even after the deadline to bring their loan current, the homeowner still has the option to to pay the entire loan amount up to the time of the Trustee Sale. However, once the Trustee Sale is recorded, the property is transferred to a new owner. In most cases it is the lender itself and the homeowner loses the home. The property is then owned by the lender and becomes a real-estate-owned or REO property.
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