Foreclosure and REO Properties Expert Advice

“Distressed property” is by definition a piece of real estate that is under duress or is in some way becomes a nonperforming asset.

There is a timeline and reference point that is indicative to how much stress a piece of property has.

This article addresses this concept of when  payments are missed and property owners head down the path towards foreclosure.

Real estate becomes distressed as soon as a  payment is missed.

Lenders begin to track this and start watching it more closely.  The reason is because when most borrowers miss a payment, they have a very hard time catching up and getting current.

If a customer misses their first payment, it is even more troubling for the lender as most loans do not go delinquent right away, and thus, are cause for more concern.  Lenders will try to contact the borrower either by letter or phone.

After the second payment is missed or the loan becomes 60 days past due, then the lender starts reviewing their legal rights.  This is when a  “notice of default“  usually gets filed indicating that the lender is starting the formal process of foreclosure.

Now, is when the distressed property comes under much more pressure as the lender is beginning to incur costs and the homeowner often stops communicating.  Research indicates that most homeowners that go into foreclosure  never contact their lender.

The process gets tougher from here as the borrower and lender become adversarial. 

From this point,  the status of the distressed property may take upwards of 6 months to a year to be resolved either by the lender taking the property back in foreclosure, the borrower selling the house, or a negotiated transfer of the property by all parties.

The usual outcome of this action is that the original owner loses possession of the property and must move.

This can appear to be a great opportunity for investors, but the reality is much different.

The lenders are reluctant to sell the house below market, while the investors want to get the lowest price possible. While there are  “great deals”  in today’s current environment,  location is a major factor.

One may pay 30 to 40 cents on the dollar for a home in Detroit, Cleveland, or Miami,  but one must be realistic and have an exit strategy in place.  Otherwise, a  distressed property can become an  “albatross around your neck”.  Resolutions and a plan are the key.

At Virtuosity Unlimited, LLC,  we provide homeowners and investors with viable  solutions to make that distressed property a worthwhile investment once again.

If you are an investor or a property owner in default, we encourage you to contact us so that we may share with you some of our unique programs that keep the owner in the house (which is what banks want) and provides a good return to the investor.

Until next week,
Tully

Next week’s topic:  Homeowner’s Options When In Default