User:TexasDA/1. Pre-Foreclosure 74K // Pre Foreclosure (point back to pre-foreclosure) 74K

Pre-foreclosure
Pre-foreclosure is essentially a grace period in which a homeowner who is delinquent on his or her mortgage payments can either find a way to make up the missing payments or work with their lender to sell the home.

A property becomes subject to pre-foreclosure after the property owner falls behind on a number of mortgage payments and therefore defaults on the loan financing the property. Once the loan falls into default, the lender will either file a lis pendens or a notice of default against the owner of the property.

In the period of pre-foreclosure, the property owner can halt the foreclosure by catching up on his or her mortgage payments or a deed in lieu of foreclosure, which gives ownership of the property back to the lender. Property owners can, if their lender is amenable, make a short sale in which a third party buys the home from the lender for less than the agreed upon mortgage.

State laws
Each state has different laws regarding foreclosure and pre-foreclosure periods. For example, in Alabama, foreclosures are loosely regulated and most are conducted out of court. The pre-foreclosure period generally ranges from 49 to 74 days. Borrowers have the right to stop the foreclosure at any time up until the sale and can redeem the property up to a year after its sale.

In Arizona, the pre-foreclosure period is typically about 90 days. In foreclosure, both judicial and non-judicial, the lender must post a notice of sale in three public places for at least 30 days prior to the sale. A notice of sale must also run in a local newspaper at least once per week for four weeks. Owners have the right of redemption for up to 12 months after the sale.

The pre-foreclosure period in California is 117 days. Almost all foreclosures in California are handled out of court and the owner has until five days before sale to halt the foreclosure by getting caught up on payments. The owner can redeem a foreclosed property in 365 days after the sale. Over in Idaho foreclosures may be done in or out of court, although most are done out of court. The pre-foreclosure period is 150 days. The foreclosure can be halted up until the date of sale depending on the lender. The redemption period is 365 days.

As shown above, the pre-foreclosure and redemption periods in states can vary widely.

Pre-foreclosure options
There are a wide variety of methods in which a property owner can resolve the pending foreclosure while the property is in the pre-foreclosure period.

The property owner may negotiate a repayment plan with the lender, which will establish a schedule in which the borrower can make the regular monthly payment plus an extra payment until the delinquent amount is repaid.

Another possible solution is a forbearance plan, which provides a temporary suspension or reduction of the mortgage payment. The payment will later be increased to repay the shortfall.

The lender may choose to allow the borrower to modify his or her mortgage, which will allow the borrower to refinance the debt or perhaps lower monthly payments by extending the mortgage over a longer period of time.

Borrowers who received a loan insured by the Federal Housing Authority, the lender may be able to negotiate a one-time payment from the FHA to cover the delinquency.

Borrowers with significant equity in their homes may be able to use that equity to pay the amount they're behind on their mortgage.

Borrowers who are unable to catch up with the mortgage payments may choose to sell the home during the pre-foreclosure period. If they have substantial equity, they may be able to recover some of their investment if the home sells for a good price. Some lenders will agree to allow the borrower to execute a short sale, in which the lender will accept a price for the home that is less than the mortgage amount. Homeowners can also sign the home over to another person who will make payments in the homeowners' stead.

References

1. http://www.realtytrac.com/foreclosure-laws/foreclosure-laws-comparison.asp

2. http://www.investopedia.com/articles/pf/07/avoid_foreclosure.asp

3. http://www.hillcountrytimes.com/default.asp?sourceid=&smenu=97&twindow=Default&mad=No&sdetail=2325&wpage=1&skeyword=&sidate=&ccat=&ccatm=&restate=&restatus=&reoption=&retype=&repmin=&repmax=&rebed=&rebath=&subname=&pform=&sc=2264&hn=hillcountrytimes&he=.com

4. http://www.phfa.org/consumers/homeowners/alternatives.aspx