How to check whether a foreclosure is in the works
Last week I wrote a blog post about the time frame for short sale approvals being tough to predict. In fact, I said that not even Nostradamus could make that prediction. That being said, there is one component of a distressed property transaction that can be predicted with absolute certainty. And… that’s the date of the Trustee’s Sale (a.k.a. foreclosure sale).*
In the state of California, when a Notice of Trustee’s Sale is recorded, this usually means that the Trustee’s Sale will occur in 21 days. The specific sale date is mentioned in the Notice. That date can be seen as an absolute.
When you are negotiating or processing a short sale, it is important to be mindful of the date of the Trustee’s Sale. Sometimes the mortgage lender may be willing to postpone this date in order to review (or continue to review) the property for short sale approval. Whatever the case, if you are not keeping track of the date, then the subject property might be a subject REO listing for one of your colleagues.
There are several ways to keep track of those foreclosure dates.
First, when you take a short sale listing, ask the seller how many mortgage payments s/he has missed. If the answer is ‘none’, ask him or her to alert you if and when s/he begins to miss payments. When sellers begin to miss payments, things start to happen.
Second, order a property profile or preliminary title report from a local title company. This report will include a list or any liens recorded against the property. A review of this document will let you know whether the foreclosure process has begun. In short sales, you are working against the clock (which stops on the foreclosure sale date), and it’s best to know when the clock may stop ticking!
Another way to gauge the foreclosure sale time frame is to ask the mortgage lender. Give the mortgage lender a call and ask whether foreclosure proceedings have begun and whether a sale date has been scheduled for the property. Note that frequently when you contact your mortgage lender you may be calling another state (or country). So, while you may fully understand the foreclosure laws and lingo for your state, the individual on the other end of the phone may be using different vocabulary to discuss the very same thing.
I once contacted a lender and asked whether a Notice of Default had been recorded against a specific property. I realized after a little while that the woman on the other end of the phone had no idea what I was talking about BUT she did tell me that foreclosure proceedings had begun on a specific date (which was akin to the very same thing).
Lastly, make sure to keep all of the information you collect in one place (your communication log)—including the names of the individuals that you speak with, any emails that they may send, and all of the details they can provide. Recently, the postponement of a Trustee’s Sale for one of my files was denied by Fannie Mae. But, because I kept extremely good records, I was able to use a copy of a Bank of America employee’s single sentence email to convince Bank of America and Fannie Mae to postpone the sale—15 minutes before the sale was set to occur! It took time and energy, but I was pleased to be able to get the job done.
Keeping accurate records and familiarizing yourself with local foreclosure laws and time frames will really help you to be more successful in your short sale negotiations.
*Please note that foreclosure laws differ from state to state. If you are unfamiliar with the foreclosure laws and time frames in your state, consult your local Realtor® Board or an attorney. And… there is always Google.