Definition of Foreclosure:
Orange County Foreclosure Process:
Foreclosure is a process that transfers the right of home ownership from the homeowner to the bank or lender. A home goes into foreclosure when the owner defaults on his mortgage loan payments because they were either unable or unwilling to continue making payments. Once a homeowner receives a notice of default (NOD), they'll usually have 3 - 5 months to bring the mortgage current before the lender will officially foreclose on the home. Foreclosure is a costly process for the lender and will definitely affect a person’s credit rating – for the worst.
The Orange County Foreclosure Process:
Once a borrower falls 2, 3 or 4 payments past due on the monthly mortgage payment (it depends on the lender), the bank will issue a notice of default, the first step of the foreclosure process. At this point, the homeowner may try to work out a deal with the lender where they are able to sell the home as a short sale if they owe more on the mortgage than the home is worth. This is a long and difficult process that requires the approval of all lien holders on the mortgage.
If the short sale fails, the lender will appoint a trustee to sell the home at a public auction to an all-cash buyer. The trustee is usually an investor representing the collective interests of all the lien holders on the home. If the home doesn't sell at auction, the lien holders are either paid off through private mortgage insurance (PMI) payments if the homeowner paid insurance as part of his monthly mortgage payment.
Finally, the lender's bank will usually hire a local Orange County REALTOR® to list the home in the Multiple Listing Service (MLS). Foreclosures listed in the Orange County MLS are easier to buy than short sales because there is only one lien holder, the bank; whereas with short sales, multiple lenders and lien holders (think tax liens, HOA liens) may need to approve of the sale.