Foreclosure Crisis Is Engulfing the Entire US Nation

The foreclosure crisis is engulfing the entire US nation and according to Real Estate reports, the statistics for the year 2008 are alarming. Foreclosure filings reported during the year – default notices, auction sale notices and bank repossessions included – were pertaining to 2,330,483 properties, scattered around all the States of US without exception. Of these distress sale properties listed under foreclosures, a majority of them are Bank-owned and repossessed properties.

Bank foreclosed homes or Bank-owned and repossessed homes are a segment of the foreclosure properties available for sale. When a home owner defaulted in repayment of the mortgage loan, extended on the security or pledging of the concerned property at the time of buying it, the Banks or mortgage lenders have the right to take action to retrieve the outstanding loan amount from the home owner. This legal action is known as foreclosure process and it is governed by the State Foreclosure Laws.

Each State has enacted its own laws to stipulate how the foreclosure process should be initiated by the mortgage lender – either through judicial foreclosure process involving the Courts or non-judicial foreclosures out of Courts. In the judicial foreclosure, the lender has to file a law suit against the barrower, establish the balance outstanding on the home loan and get a Court order to conduct a public auction of the property through Sheriff Sale. This is usually a long drawn process and typically takes a minimum of 6 months to one year to dispose off the property.

On the other hand, a non-judicial foreclosure is initiated through an appropriate clause in the mortgage deed whereby the property can be sold through public auction by a Trustee Sale out of Court, comparatively in quick time – say 3 to 4 months maximum. In either of the foreclosure processes, if nobody bids the minimum bid of the property at the public auction, the lending Bank takes repossession of the concerned property. These are known as Bank-owned and repossessed properties.

These properties will be lying as non-performing assets in the Books of the bank and in real times they are liability to Banks. The money invested on these properties is lying idle, losing interest every day. Unless they are sold out and converted into hard cash, they are only dead assets for the Banks. In addition, most of the Banks keep these properties in a “sale-able” condition and the upkeep and maintenance of these properties also involve additional expenditure to Banks.

From the home buyers’ point of view, Bank foreclosed homes are best buy of all the three stages of foreclosure – pre-foreclosure; actual public auction; and repossession. First of all, these properties will be encumbrance-free as any second or third mortgage on them, tax-liens, mechanic liens, or any other debts against the property are wiped off before taking repossession of the property by the Bank.

Secondly there is an urgency to sell off these properties, lying in their books as dead stocks and home buyers can take leverage on this by negotiating the sale price, down payment, interest rates for balance payments, reduction or removal of the closing costs etc. The bargain will save thousands of dollars, apart from the low price below the market values of the properties often quoted by the Banks.
Finally home buyers are saved of time, money and emotional harassment in evicting the present home owner of these Bank foreclosed homes, as the Banks take charge of the eviction and keep the properties in a ready-to-occupy condition.

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