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Understanding Foreclosures

It is an unfortunate commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate “bonanza”, many people go to any lengths available to get into the market through investments in vacation homes, rental housing and trading up to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. It is possible that neither will occur and borrowers may be faced with large balloon payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner’s financial situation improves.

Let’s say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the county recorder’s office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before.

After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes on the block. At the sale, buyers must pay the amount of their bid in cash, cashier’s check or other instrument acceptable to the trustee. A lender may “credit bid” up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

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Nick Duzich
Hirschi Realtors
3631 Maplewood Ave., Ste. 1
Wichita Falls, TX 76308
Cell: 940-224-1224
Fax: 940-691-1213
Email:
NDuzich@HirschiRealtors.com
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We had such a great experience with Nick Duzich! We were very picky about finding the perfect house and he went above and beyond to make sure we found "The One" Thank you Nick for all your hard work. David & Lindsey Cadaoas, Wichita Falls, TX
Nick was most instrumental in selling my house. For every possible roadblock he was very resourcefull in helping me find a low cost and efficient way to overcome the difficulties. I would recommend Nick as an excellent agent to anyone wanting high quality services. I am greatful for all he did in selling my house Nancy Terry
Nick Duzich was very aggressive when it came to selling our house. We were in the process of being transferred to Corpus Christi and our family was split up. He knew this was a difficult time for us. Nick went above and beyond to make sure to market the house. We had lots of showings and he made sure it was advertised everywhere. It was non stop interest. We had to be on our toes with all the requests and showings. Nick did an amazing job and we were in contract within 3 weeks. Nick was always there for us and went above and beyond to help in any way he could. He is very professional and trustworthy. Nick treated our house with respect. He was very helpful and very easy to communicate with. Talking to him is like talking to a friend. You feel like you have known him for years. I would recommend Nick to anyone who is looking for a realtor who will come into your home and sit down with you and listen. He is definitely there for his clients and he will treat you like family. This was the easiest transition in all my house buying years.  The Wallanders, Wichita Falls, Texas
Nick was very intuitive to our needs. He made sure since we were moving from 6 hours away to get us in a neighborhood that would best fit with our needs. Nick is so easy to communicate with. His way of being friendly helped us communicate better with him. We would recommend him to anyone shopping for a home! Melissa Colclasure
We loved our experience with Nick and Hirschi. We love our new home and wouldn't have been able to go through everything as smoothly as we did with out him. He was friendly and easy to deal with. He is very personal and paid attention to the details we required in searching for our new home. He is a people person and cuts to the point, we trusted his opinion about how to handle the purchase. Thanks Nick! Brandi H.
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