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Distressed Sellers

Consequences of Foreclosure

A foreclosure occurs when the homeowner has failed to make payments and has defaulted or violated the terms of their mortgage loan.

For many homeowners, their monthly mortgage payment is now a constant source of stress. If you’re a homeowner whose home is in foreclosure, you may be wondering what’s going to happen next.

Unfortunately, the process can can have long-lasting consequences, such as:

  1. You will always have to disclose that you have had a foreclosure on any mortgage application and some job application you submit in the future, and this can have an adverse affection your future mortgage rates. This is the only credit item that is asked specifically and does not rely on what is on an individual’s credit report.
  2. Credit scores will be lowered by 300+ points, and a foreclosure is the most devastating credit issue in relation to future credit availability.
  3. A foreclosure is the one credit report item that is almost impossible to have “repaired”.
Certified Distressed Property Expert
  1. Your lender can seek a deficiency judgement against you and collect for any amount they do not recuperate at bank sale.
  2. Many current employers run credit checks on prospective employees, and foreclosure is one of the top items that will put a potential new hire in jeopardy.
  3. Many current employers run credit checks, and a foreclosure can put a current position in jeopardy.
  4. Security clearance and government positions, including but limited to military and law enforcement, can be jeopardized by a foreclosure.
  5. You may be responsible for any deficiencies after foreclosure for an indeterminate period of time depending on the state that you live in. This can land you in never ending collections.

A foreclosure can usually be avoided—even if you already received a foreclosure notice.

It’s important to know your options and understand their impact on your financial future. As your Certified Distressed Property Expert® (CDPE®), I will explore every option and work toward a resolution.

Certified Distressed Property Expert

While some choices may be difficult to make, having the information will help you feel more in control and ready to move forward.

It may not seem like it now, there will come a time where your current financial troubles will pass. You will feel much better knowing that you did everything you could yo avoid this devastating situation that so may people face today.

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Dana Ash-McGinty

Dana Ash-McGinty is the Principal Broker of ASH | MCGINTY, a Washington, DC based real estate brokerage. This real estate maven has 15+ years experience in residential, commercial and land sales in addition to multi-state residential renovation, re-zoning, and condo conversion projects. A sought after real estate authority, she has been featured on CNN and in various real estate and financial publications.

Dana is married to the highly esteemed Dr. Dana W. McGinty, a Washington, DC internal medicine physician and medical correspondent. They are often referred to as “The Danas”.
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Cash Buyers Distressed Sellers

Who Really Buys Houses in Any Condition?

Who-Really-Buys-Houses-in-Any-Condition

I’m sure you’ve seen these signs everywhere! “We Buy Houses in Any Condition.” What’s up with this?!

Why would anyone want to buy a house in any condition?

These companies and sometimes individual are referred to as cash house buyers, house buyers or wholesalers, etc. These real estate investors will invest some cash into the property and either flip (re-sale) or rent out the property.

While cash buyers purchase homes at a discount, there are some non-monetary advantages.

Speed of Sale

Cash buyers typically close on the sale much faster than a traditional buyer using a mortgage to purchase a home. Some cash buyers will purchase a home as quickly 5-10 days, depending on the complexity of the situation.

Homeowners facing a foreclosure may find themselves with only days to sell their homes before they are auctioned. Having their home foreclosed destroys their credit and ability to purchase a home in the future.

Someone that inherited a house may have also inherited a hefty, unplanned mortgage payment and property taxes. Cash buyers can provide a level of speed in purchasing the home that most other buyers cannot.

Again, how quickly a cash buyer can close depends on the presence of liens, the complexity of title, and the number of parties involved. If the property is owned by a single party with a mortgage loan being the only lien, the closing can happen it as little as 3 days.

Regardless of the situation, an experienced closing attorney have the knowledge to get these issues handled and still close on a short timeline.

Buying “As-Is”

You find this hard to believe, but the worse shape a home is in, the more interested a cash house buyer/investor will be in purchasing it. Real estate investing is a numbers game. They won’t care if the home has termite damage or needs a new roof. Fire damage won’t even scare away the experienced investor.

Because they are repeat customers, real estate investors are often able to negotiate the cost of home renovations and repairs. Those discounts coupled with the lack of most buyers interest in homes that need significant work, lowers the market value of the home and leaves room for the investor to make a reasonable profit.

While some real estate investors will purchase homes in move-in condition, they typically prefer homes that need repairs.

No Real Estate Commissions/Closing Costs

In the DC area, most Realtors charge 6% commission. Saving on paying real estate commissions will give you more room to negotiate.

Additionally, cash buyers also typically pay all closing costs – something that tends to be covered by the seller in a traditional agent led market sale. Those closing costs can save sellers 1-3% of the sales price.

While you won’t need to pay any commissions or closing costs, your net profit from the sale may still be lower than what you would get if you sold the home on the traditional market. 

Do cash house buyers really pay cash?

You may be asking yourself how these investors are purchasing these homes. Are they really buying them in cash? The answer is yes… and no.

Real estate investors typically use money from “hard-money lenders” (also called private money lenders) to finance their purchases. While it is technically still a loan, it’s not a loan in the traditional mortgage sense.

Conventional mortgages require underwriting, appraisals, and time to verify everything and authorize funding for the loan. Traditional mortgages can typically take anywhere from 21-45 days to close after the home is under contract.

These lenders lend them money at higher rates of interest that allows them to purchase a home quickly using their lender’s cash. These relationships enable cash buyers to buy a home without all the red tape typical mortgages require. Then the investor either flip the house or later refinance it using a traditional mortgage to become a rental – paying the private lender back their cash with interest.

As far as the homeowner selling the home is concerned, it is nearly identical to as if someone was buying your home in straight cash. Cash house buyers who have good relationships with their lenders- they don’t need appraisals, home inspections or the typical underwriting approval.

In this scenario, you won’t risk a buyer’s financing falling through, and not having the time to start the entire process all over again.

Not everyone who advertises themselves as a cash buyer is reputable. You can learn how to spot legitimate house buying companies and investors.

Need to sell fast?

We can help. Contact us for a quick complimentary consultation. We will present you with several viable options for selling your home based on your specific situation – including providing you with a free, no-obligation cash offer from one of cash real estate investors. Our clients buy houses all over the DMV area and strive to create win-win situations for everyone involved.

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Distressed Sellers

Foreclosure Definition – What Exactly Does Foreclosure Mean?

Every year, hundreds of thousands of people face foreclosure and unfortunately there are a lot of people don’t understand the process.

Foreclosure is the legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments.

There are two types of foreclosure actions used to foreclose on real estate mortgage and deed-of-trust loans: judicial foreclosure and nonjudicial foreclosure.

Judicial Foreclosure

A judicial foreclosure means the foreclosure must be processed through the state’s court system. A public notice of lis pendens or “suit pending,” is filed with the county or public recorder to notify the general public about the pending lawsuit against the property owner.

Sequential Outline of the Judicial Foreclosure Process

  1. The lender or servicer usually sends out three letters to the borrower about the borrower’s nonpayment at day 30, 60, and 90.
  2. A lawsuit is filed by the lender in the court system and served to the borrower to officially start the pre-foreclosure process.
  3. The borrower has to respond to the foreclosure lawsuit before a court hearing date is set. The borrower can raise objections and delay the process. a) Example: procedural foreclosure missteps by the lender. b) Example: active duty objection.
  4. If the borrower doesn’t respond within a certain number of days, which varies by state, then the court will grant a default judgment which allows the lender to move forward with foreclosure.
  5. The foreclosure case is heard by a judge in the court and either the lawsuit is dismissed or the judge orders the loan to be foreclosed on by setting a foreclosure auction sale date.
  6. The public foreclosure sale date is advertised.
  7. At the auction the property is sold to the highest bidder, or, if nobody bids, then the foreclosing lender takes the property back. The proceeds from a sale satisfy obligations of the borrower in the following order: a) Mortgage holder. b) Other lien holders. c) Any leftover proceeds go to the former owner of the property.
  8. The borrower may exercise statutory redemption rights after the sale if they exist within the state.
  9. A certificate of title or sheriff’s deed is given to the winning bidder after the state’s statutory redemption period is over.

Nonjudicial Foreclosure

A nonjudicial foreclosure is also known as a foreclosure by power of sale. This method can be exercised if a power-of-sale clause is included in the mortgage or a deed of trust.

The main difference in this method of foreclosure is that the sale takes place without supervision of the court and the lender can invoke its right to foreclose by filing a notice of default with the county or public recorder’s office.

Sequential Outline of the Nonjudicial Foreclosure Process

  1. The lender or servicer usually sends out three letters to the borrower about the borrower’s nonpayment at day 30, 60, and 90.
  2. The trustee files a notice of default with the county or public recorder’s office.
  3. A date for the trustee sale is set. The length of time between the filing of the notice of default and the public trustee sale will vary according to the state you live in. Check your state statutes for this timeline.
  4. The trustee’s sale is advertised to the public.
  5. The trustee’s sale takes place and the property is auctioned off to the highest bidder or taken back by the lender if the lender does not get outbid.
  6. A trustee’s deed is provided to the highest bidder after any statutory redemption period expires. This time period will vary by state.

The Strict Foreclosure Process

In a just a few states, there is a pre-foreclosure nuance called the strict foreclosure process. Strict foreclosure occurs when the court determines that the value of the property is less than what is owed to the lender.
Once decided, the judge will set a law day, which allows the borrower a specified period of time to pay off the debt required by the court. If the borrower fails to meet this deadline, the mortgage holder automatically gains the title to the property and does not have an obligation to sell it at auction.

State’s Foreclosure Types and Timelines

District of ColumbiaMaryland
JudicialNoYes
NonjudicialYesNo
Process Period Days4746
Publish Sale Days1830
Redemption Period DaysNoneCourt decides
Sale/NTSTrusteeCourt
CommentTrustee sale onlyJudicial only
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Dana Ash-McGinty

Dana Ash-McGinty is the Principal Broker of ASH | MCGINTY, a Washington, DC based real estate brokerage. This real estate maven has 15+ years experience in residential, commercial and land sales in addition to multi-state residential renovation, re-zoning, and condo conversion projects. A sought after real estate authority, she has been featured on CNN and in various real estate and financial publications.

Dana is married to the highly esteemed Dr. Dana W. McGinty, a Washington, DC internal medicine physician and medical correspondent. They are often referred to as “The Danas”.
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