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Health & Fitness

Vocabulary and this Week's Closed Sales

There are still many foreclosures in progress in NJ and many properties already for sale, which are in various stages of foreclosure. The average time for a complete foreclosure process in NJ is over 3 years, which is much slower than the national average and the result is that these properties will be on the market here for quite a few more years. Whether you are interested in selling a property or buying one, knowing the terminology is a big help.

When homeowners do not repay their mortgages, Mortgage Lenders/Banks lose the initial sum they lent, as well as the interest they would have earned as the loan was repaid. This leads to actions that are designed to protect the Lenders investors. There are multiple stages to these actions both reversible and non-reversible. There are different levels of damage to your credit and future ability to buy or even rent as a result of when and what actions you take.

Simply put, Foreclosure is the process by which a homeowner’s rights to a property are forfeited because of a failure (Default) to pay the mortgage. If the owner cannot pay off the outstanding debt or sell it via Short Sale, the property then goes to a Foreclosure Auction. If the property does not sell at auction, it becomes the property of the lending institution, a Real Estate Owned property or REO.

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After a default by the HomeOwner, usually as few as 3 missed payments lenders will act fast and record a public notice with the County Recorder’s Office, indicating the borrower has defaulted on his mortgage. In NJ it’s a "lis pendens"  -- Latin for “suit pending. They will also contact the homeowner by mail in writing multiple times and usually provide an opportunity to straighten out the account in some way. I am constantly amazed and saddened when speaking to homeowners in this situation when they tell me they received Lender/Bank notices for over 6 months and just ignored them!

The status of the property at this point is a Pre-Foreclosure and is reversible.

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One of the ways that can be worked out with a lender is a Loan Modification, to recast the terms of the loan and get it back on track by extending the repayment period to lower the monthly payment or cover the accrued interest/fees from the unpaid months. This can usually work if you act fast, can resume payments, and you are not very far behind so the added fees are not huge.

 

The second most common way out, again very early on in the process is a Short Sale. Most lenders will allow the property to be sold hoping to recover what is owed on the mortgage. But in many cases the mortgage amount is so high that it exceeds the market (sellable) value (underwater) and so they may consider accepting any amount that is reasonably close to the current market value. They may set the amount they will accept ahead of time, but many times they will just wait and see what a buyer will offer and them render a decision. Getting an answer can be a lengthy process and may take anywhere from 2-6mths or more, which defies logic but it is typical. The Lender may also set a cut-off for a Short Sale, and only allow a set period of time, if no offers are made or acceptable then the Lender then moves to full foreclosure. During this time the Homeowner may often still live in the home, as it is more desirable from a maintenance standpoint for all concerned.

When a Short Sale is not agreed upon and a property goes to Full Foreclosure the HomeOwner will be notified that they must vacate the premises. Many homeowners will wisely choose to vacate as soon as they know that there is no recourse to the foreclosure.  Otherwise this can be a horror story, the advance notice may not be much, the property can be locked up leaving a Homeowner out and their belongings in; homeowners can get angry and cause damage to a property as well as leave it in a bad sanitary condition.

The Lender will next offer the property at Foreclosure Auction. If no one buys it at auction for the amount needed to repay the mortgage and foreclosure costs, the bank takes ownership of the home. Often the Auction price will include the balance of the unpaid mortgage loan, interest owed, attorney's fees and costs generated by the foreclosure process, as a result many times they are over market value and do not sell. 

After a failed Auction the property owned by the Lender is then moved to the final stage and sold as an REO, or Real Estate Owned property. Many Lenders have REO departments. The REO specialists are in charge of preparing the house for sale and then setting a price. REOs are usually sold in "as is" condition, meaning the Lender does not make needed repairs to the property. The REO Buyer will find a vacant property that is free of debts, it might be in excellent condition, or it could be in complete disrepair. Purchasing an REO can be difficult and it is best to work with professional representation. There are Realtors who handle this type of listing, Real Estate Attorneys and using a good Contractor to estimate what may need to be done to the property. This is especially important given that in NJ these properties may have been sitting unoccupied for as long as 3-5 years. There are various websites listing REO homes as well as them being listed on the regular real estate sites. They will be identified as  “Foreclosures”, "Bank Owned” or “Real Estate Owned”.

If you are in default, are just having difficulty making your mortgage payments, or already received notices of default then please contact your mortgage lender immediately. Consider consulting with a bankruptcy attorney. If you are interested in a short sale or have already received an approval from your lender for one, contact a Real Estate Agent to get your home listed as soon as possible. If you are already in full foreclosure or danger of eviction make a plan for where you are going next and take action before you are forced to go.

Resources for help with this subject-

Federal  http://www.makinghomeaffordable.gov/pages/default.aspx

NJ  http://www.housingall.com/help-with-housing/home-owner-programs.asp 

Pat Linde-Neidermeyer, Veltri Realtors

Call me: 732-598-8348

Email me: PatatVeltri@Gmail.com

www.VeltriRealtors.com

Now here are This Week’s Closed Sales for your area.

AVON

235 Lincoln Ave  $950,000

BELMAR

99 13th Ave  $995,000

BRADLEY BEACH

600 Newark Ave  $390,000; 508 Monmouth Ave  $400,000

LAKE COMO

1606 Main St  $175,000

MANASQUAN

361 First Ave  $355,000; 27 Broad St  $360,000

SPRING LAKE HEIGHTS

305 9th Ave  $490,000

SPRING LAKE

100 Atlantic Ave  $1,598,000; 2105 Ocean Ave  $2,315,000

WALL

1794 Glendola Rd  $195,000; 903 Third Ave  $210,000

1415 Bay Plz  $285,000; 2933 Adams St  $315,000

3511 Windsor Rd  $731,250

All closed sale prices listed are as submitted and recorded by the Monmouth Multiple Listing Service.  Not responsible for typographical errors    

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