Repos

Information on Bank Repos and Foreclosures

Buying Bank owned properties (reo) 

YOU’VE WATCHED THE LATE-NIGHT INFOMERCIALS AND YOU’RE READY TO DO THE BANK “A FAVOR” AND TAKE A PROBLEM OFF THEIR HANDS. PLUS, YOU EXPECT TO MAKE "A KILLING" IN THE PROCESS. SOUNDS GREAT AND IT MIGHT JUST HAPPEN, BUT FIRST YOU SHOULD TAKE A LOOK AT SOME FACTS AND GET PREPARED.
AN REO (REAL ESTATE OWNED) IS A PROPERTY THAT GOES BACK TO THE MORTGAGE COMPANY AFTER AN UNSUCCESSFUL FORECLOSURE AUCTION. YOU SEE, MOST FORECLOSURE AUCTIONS DO NOT EVEN RESULT IN BIDS. AFTER ALL, IF THERE WAS ENOUGH EQUITY IN THE PROPERTY TO SATISFY THE LOAN, THE OWNER WOULD HAVE PROBABLY SOLD THE PROPERTY AND PAID OFF THE BANK. THAT IS WHY THE PROPERTY ENDS UP AT A FORECLOSURE OR TRUSTEE SALE.

Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees and any costs association with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier's check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in "as is" condition, which may include someone still living in the property. There may also be other liens against the property.

Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property "reverts" to the bank. It becomes an REO, or "real estate owned" property.

THE BANK NOW OWNS THE PROPERTY AND THE MORTGAGE LOAN NO LONGER EXISTS. THE BANK WILL HANDLE THE EVICTION, IF NECESSARY, AND MAY DO SOME REPAIRS. THEY WILL NEGOTIATE WITH THE IRS FOR REMOVAL OF TAX LIENS AND PAY OFF ANY HOMEOWNER’S ASSOCIATION DUES. AS A PURCHASER OF AN REO PROPERTY, THE BUYER WILL RECEIVE A TITLE INSURANCE POLICY AND THE OPPORTUNITY TO INVESTIGATE THE PROPERTY.

A bank owned property might not be a great bargain. Do your homework before making an offer. Make sure that the price you pay (if you’re successful) is comparable to other homes in the neighborhood. Consider the costs of renovation, including time to complete them. Don’t get caught up in a ‘bidding war’ and pay over market value. It’s an old myth that “foreclosures” are a bargain.

EACH BANK/LENDER WORKS A LITTLE DIFFERENTLY, BUT THEY ALL HAVE SIMILAR GOALS. THEY WANT TO GET THE BEST PRICE POSSIBLE AND HAVE NO INTEREST IN "DUMPING" REAL ESTATE CHEAPLY. GENERALLY, BANKS HAVE AN ENTIRE DEPARTMENT SET UP TO MANAGE THEIR REO INVENTORY.

Once you make an offer to purchase, banks generally present a "counter-offer." It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer.

Your offer or counter-offer will probably have to be reviewed and approved by several individuals and companies. Even once an offer is accepted, the bank may insert wording like “..subject to corporate approval with 5 days."

BANKS ALWAYS WANT TO SELL A PROPERTY IN "AS IS" CONDITION. MOST WILL PROVIDE A SECTION 1 PEST CERTIFICATION, BUT NOT UNLESS YOU INCLUDE IT IN YOUR OFFER AND NEGOTIATE THE POINT. THEY WILL ALLOW YOU TO GET ALL THE INSPECTIONS YOU WANT (AT YOUR EXPENSE), BUT THEY MAY NOT AGREE TO DO ANY REPAIRS.

Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct.

Even though you agreed to “as is," always give the bank another opportunity to make repairs or give you a credit after you’ve completed your inspections. Sometimes they’ll re-negotiate to save the transaction instead of putting the property back on the market, but don’t take it for granted.

Banks do not want to see a lot of proprietary disclosures; they are exempt from the California Seller’s Transfer Disclosure Statement (TDS). If there are real estate agents involved, either representing you or the bank, those agents are required to provide you their disclosure statements.

Most banks will not provide financing on their REO's but it doesn’t hurt to ask. Especially if the property has extensive damage and you are purchasing it "as is."

BEFORE MAKING AN OFFER, HAVE YOUR AGENT CONTACT THE THE LISTING AGENT AND ASK THE FOLLOWING:
  • Are there any inspection reports?
  • What work has the bank agreed to?
  • Is there a special "as is" form?
  • How long does it take the bank to accept an offer?
  • How does your agent deliver the offer?

Offers are usually FAXED to the bank. The listing agent needs your originals. There is no formal presentation. Keep in mind: nothing happens evenings and weekends (banks are closed)

Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography. Make your offer easy to accept.

Hopefully these tips will manage your expectations. Remember that REO's sell at pretty close to full market value and are not the deals presented on late night television. by Copyright 2000 Walt Harvey, real estate broker, CRS, GRI

Real estate owned or REO

From Wikipedia, the free encyclopedia

Real estate owned or REO is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank negative equity: the minimum bid in most foreclosure auctions equals the outstanding loan amount, the accrued interest and any costs associated with the foreclosure sale including attorneys' fees.

After an unsuccessful auction, the bank will go through the process of trying to sell the property on its own. It will remove some of the liens and other expenses on the home and try to resell it to the public, either through future auctions or direct marketing through a Realtor. Generally speaking, bank REO properties are in poor shape in terms of repairs and maintenance; however, real estate investors will often go after these properties as banks are not in the business of owning homes and so, in some cases, the low price can more than compensate for the condition of the property.

FORECLOSURE

From Wikipedia, the free encyclopedia

Foreclosure is the legal process in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien".[1]


Types of Foreclosure

The mortgage holder can usually initiate foreclosure at a time specified in the mortgage documents, typically some period of time after a default condition occurs. Within the United States and many other countries, several types of foreclosure exist. Two of them - namely, by judicial sale and by power of sale - are widely used, but other modes of foreclosure are also possible in a few states.

Foreclosure by judicial sale, more commonly known as Judicial Foreclosure is available in every state and required in many, involves the sale of the mortgaged property under the supervision of a court, with the proceeds going first to satisfy the mortgage; then other lien holders; and, finally, the mortgagor/borrower if any proceeds are left. As with all other legal actions, all parties must be notified of the foreclosure, but notification requirements vary significantly from state to state. A judicial decision is announced after pleadings at a (usually short) hearing in a state or local court. In some fairly rare instances, foreclosures are filed in Federal courts.

Foreclosure by power of sale, which is also allowed by many the states if a power of sale clause is included in the mortgage. This process involves the sale of the property by the mortgage holder without court supervision. It is generally more expedient than foreclosure by judicial sale. As in judicial sale, the mortgage holder and other lien holders are respectively first and second claimants to the proceeds from the sale.

Other types of foreclosure are considered minor because of their limited availability. Under strict foreclosure, which is available in a few states including Connecticut, New Hampshire and Vermont, suit is brought by the mortgagee and if successful, a court orders the defaulted mortgagor to pay the mortgage within a specified period of time. Should the mortgagor fail to do so, the mortgage holder gains the title to the property with no obligation to sell it. Historically, strict foreclosure was the original method of foreclosure.

Acceleration

The concept of acceleration is used to determine the amount owed under foreclosure. Acceleration allows the mortgage holder to declare the entire debt of a defaulted mortgagor due and payable. If a mortgage is taken, for instance, on a $10,000 property and monthly payments are required, the mortgage holder can demand the mortgagor make good on the entire $10,000 if the mortgagor fails to make one or more of those payments.

The vast majority (but not all) of mortgages today have acceleration clauses. The holder of a mortgage without this clause has only two options: either to wait until all of the payments come due or convince a court to compel a sale of some parts of the property in lieu of the past due payments. Alternatively, the court may order the property sold subject to the mortgage, with the proceeds from the sale going to the payments owed the mortgage holder.

Process

The process of foreclosure is lengthy and the time frames for when the lending institution begins the process vary from state to state. Other factors, such as the increasing availability of personal loans for owners facing foreclosure, present homeowners with foreclosure avoidance options. Websites which connect individual borrowers and homeowners to individual lenders are increasingly used as mechanisms to bypass banks while meeting payment obligations for mortgage providers.

In the United States, there are two types of foreclosure in most common law states. Using a "deed in lieu of foreclosure," or "strict foreclosure", the bank claims the title and possession of the property back in full satisfaction of a debt, usually on contract. In the proceeding simply known as foreclosure (or, perhaps, distinguished as "judicial foreclosure"), the property is subject to auction by the county sheriff or some other officer of the court. Many states require this sort of proceeding in some or all cases of foreclosure, in order to protect any equity the debtor may have in the property, in case the value of the debt being foreclosed on is substantially less than the market value of the immovable property (this also discourages strategic foreclosure). In this foreclosure, the sheriff then issues a deed to the winning bidder at auction. Banks and other institutional lenders typically bid in the amount of the owed debt at the sale, and if no other buyers step forward the lender receives title to the immovable property in return.

Other states have adopted non-judicial foreclosure procedures, in which the mortgagee, or more commonly the mortgagee's attorney or designated agent, gives the debtor a notice of default and the mortgagee's intent to sell the immovable property in a form prescribed by state statute. This type of foreclosure is commonly referred to as "statutory" or "non-judicial" foreclosure, as opposed to "judicial". With this "power-of-sale" type of foreclosure, if the debtor fails to cure the default, or use other lawful means (such as filing for bankruptcy which provides a temporary automatic stay to the foreclosure proceeding) to stop the sale, the mortgagee or its representative will conduct a public auction in a similar manner as the sheriff's auction described above. The highest bidder at the auction becomes the owner of the immovable property free and clear of any interest of the former owner but the property may be encumbered by any liens superior to the mortgage being foreclosed (e.g. a senior mortgage, unpaid property taxes etc). Further legal action, such as an eviction may be necessary to obtain possession of the premises.

"Strict foreclosure" is an equitable right available in some states. The strict foreclosure period arises after the foreclosure sale has taken place and is available to the foreclosure sale purchaser. The foreclosure sale purchaser must petition a court for a decree that will cut off any junior lien holder's rights to redeem the senior debt. If the junior lien holder fails to do so within the judicially established time frame, his lien is cancelled and the purchaser's title is cleared. This effect is the same as the strict foreclosure that occurred at common law in England's courts of equity as a response to the development of the equity of redemption.

In most jurisdictions, it is customary for the foreclosing lender to obtain a title search of the immovable property and to notify all other persons who may have liens on the property, whether by judgment, by contract, or by statute or other law, so that they may appear and assert their interest in the foreclosure litigation. In all US jurisdictions a lender who conducts a foreclosure sale of immovable property which is the subject of a federal tax lien must give 25 days' notice of the sale to the Internal Revenue Service: failure to give notice to the IRS will result in the lien remaining attached to the immovable property after the sale. Therefore, it is imperative that the lender obtain a search of the local Federal Tax Liens so that if the persons or companies involved in the foreclosure have a federal tax lien filed against them, the proper notice to the IRS will be given. A detailed explanation by the IRS of the Federal Tax Lien process can be found.[2]

The US congress passed new act. President Bush signed into law a temporary change to the tax code. For the period Jan. 1, 2007, through Dec. 31, 2009, homeowners will not have to pay tax on any debt that is cancelled.[3] (note that there are notable exceptions, such when the cancelled debt is not on your primary residence.)

Foreclosure auction

When a bank auctions a repossessed property, they will typically set the starting price as the remaining balance on the mortgage loan. Many times, however, in a weak market the bank will set the starting price at a lower amount if it believes the real estate securing the loan is worth less than the loan.

In the case where the remaining mortgage balance is higher than the actual home value, known as an Upside-down mortgage, the bank is unlikely to attract auction bids at this price level. A house that went through foreclosure auction and failed to attract any bids becomes property of the bank. It is called REO (real estate owned). The bank will typically try to sell it at a loss later through standard channels.

Further borrower's obligations

The mortgagor may be required to pay for Private Mortgage Insurance, or PMI, for as long as the principal of his primary mortgage is above 80% of the value of his property. In most situations, insurance requirements are sufficient to guarantee that the lender will get some pre-defined percentage of the loan value back, either from foreclosure auction proceeds or from PMI or a combination thereof.

Nevertheless, in an illiquid real estate market or following a significant drop in real estate prices, it may happen that the property being foreclosed is sold for less than the remaining balance on the primary mortgage loan, and there may be no insurance to cover the loss. In this case, the court overseeing the foreclosure process may enter a deficiency judgment against the mortgagor. Deficiency judgments can be used to place a lien on the borrower's other property that obligates the mortgagor to repay the difference. It gives lender a legal right to collect the remainder of debt out of mortgagor's other assets (if any).

There are exceptions to this rule, however. If the mortgage is a non-recourse debt (which is often the case with residential mortgages), lender may not go after borrower's assets to recoup his losses. Lender's ability to pursue deficiency judgment may be restricted by state laws. In California and some other states, original mortgages (the ones taken out at the time of purchase) are typically non-recourse loans, however, refinanced loans and home equity lines of credit aren't.

If the lender chooses not to pursue deficiency judgment—or can't because the mortgage is non-recourse—and writes off the loss, the borrower may have to pay income taxes on the unpaid amount if it can be considered "forgiven debt." However, recent changes in tax laws may change the way these amounts are reported.

Any other loans taken out against the property being foreclosed (second mortgagesHELOCs) are "wiped out" by foreclosure (in the sense that they are no longer attached to the property), but the borrower is still obligated to pay them off if they are not paid out of foreclosure auction's proceeds.

 

If you are:

  • looking to invest in an REO (Real Estate Owned) Property 
  • want to know more about the foreclosure process
  • buying a home, condo or property
  • selling a home, condo or property
 
I am prepared to provide you with as much real estate information as necessary to make your big decision. Whether you are looking in La Mirada, Whitter, La Habra, Norwalk, Brea, Buena Park or any other Southern California city, I am here to provide a valuable resource.
 
Attention Asset Managers: Looking for an REO broker to inspect, evaluate, market and sell your foreclosed properties?  Send your request for my REO resume to: warrennass@gmail.com or call (714)606-0329
 
I have been listing and selling properties since 1992.  With my professional support team, I have worked with banks, savings and loans, escrow companies, title companies, mortgage insurance companies, asset management companies and other corporations.  My ability to meet deadlines, attention to detail and commitment to high quality customer service have kept me at the top of the Real Estate market in Southern California.  Working out of my centrally located office has expanded my coverage area to include cities in Orange County, Los Angeles County, San Bernadino County and Riverside County.  For a top producing agent call Warren Nass 714-606-0329 today.
 
 

Thank you for taking the time to visit my website. If you are looking to sell your current home or purchase a new one, feel free to browse my listings or search for current listings on the MLS.

Bank Repos are back, and are flooding the marketplace. For a current list of REO properties in your area, call Warren.

WARREN A. NASS

Century 21 Westworld Realty 
15058 Rosecrans Avenue, La Mirada, CA 90638 California

License # 01130292 Since 1992
Direct (714) 606-0329 

Email warrennass@gmail.com 

Website http://www.warren4realestate.com

Serving Southern California and surrounding areas - La Mirada, Whittier, Brea, La Habra, La Habra Heights, Buena Park, Norwalk, Fullerton, Yorba Linda, Placentia, Corona, Huntington Beach, Santa Fe Springs, Cerritos, Cypress, Anaheim, Anaheim Hills, Tustin, Westminster, Newport Beach, Orange, Los Angeles County, Orange County, areas of Riverside County and San Bernardino County


OBJECTIVE

To manage, market, list and sell your home, townhouse, condo, foreclosed or alternately acquired real estate (REO) in a timely, efficient and cost effective manner to achieve the highest possible recovery. Provide Broker’s Price Opinions (BPO) or Comparable Market Analysis (CMA) to establish market values for individual properties in an accurate, complete and timely fashion.

EXPERIENCE

Mission Valley Mortgage Huntington Beach, CA  Loan Processor, Loan Originator  June 1989-February 1992

Century 21 Westworld Realty La Mirada, CA  Real Estate Sales  February 1992-Present

I specialize in the sale of single family residences, condominiums, land and apartment buildings. My focus has been the listing and sale of single family residences in Southern California.  I have sold approximately $325 million worth of real estate and over 352 homes.  Since 1992, I have been a licensed full time real estate professional with the same Century 21 office. I am known throughout my market area as a reliable agent to obtain top market values and get the job done. It is my personal goal to get your REO properties off your books as soon as possible to benefit all of us.

While selling or buying a home is often an emotionally charged experience, my sensitivity and care during each phase of the transaction eases the process considerably. Knowing that a home sale or purchase often represents a family's largest lifetime investment, I provide detailed plans of action custom designed for each client. My marketing approach takes into consideration their goals, lifestyle and other special needs. I provide my clients with ongoing progress reports every step of the way so there are no surprises at the close of escrow.

I view each transaction as an opportunity to help my clients make the most informed decisions. A licensed Realtor, member of the Centurion Honor Society, seven time Centurion Award Winner, Quality Service Award Winner, Diamond Award Winner, Century 21 Westworld Salesperson of the Year, Member of the National Association of Realtors®, California Association of Realtors®, the Pacific West Association of Realtors® and Member of Southern California Multiple Listing Service.  I am always up to date on market trends and am knowledgeable about the disclosure issues and legislation that affects sellers and the real estate industry at large.

Creative marketing is central to my ongoing success. I create personalized marketing campaigns designed to sell homes at the highest price with minimum inconvenience to my clients. When a seller lists their property with me, they can count on their property being exposed to a broad base of potential, qualified buyers. From advertising on major websites and the internet on over 2500 different sites including enhanced Realtor.com, Century21.com and my website at warren4realestate.com and warrennass.com, to compelling direct mail pieces and good old fashioned networking.  I leave nothing to chance when it comes to exceeding my clients’ goals. 

I look forward to working with you and will continue to be a high achieving sales associate who will guide you through a smooth real estate transaction and get your properties SOLD.


REO Marketing Plan 

Every real buyer is working with at least one agent, and there are over 100,000 agents in L.A., Orange, Riverside and San Bernardino Counties. Speed is critical in a declining market. Properly exposing your property to all of them gives you 10 times the power of any local marketing. My sales record proves this.


  1. Premarketing: As soon as homes become vacant I order signs up and put them on our inventory on the local MLS and century21.com, so agents can show them right away.  I often have offers to present as soon as we're given a list price.
  1. Multiple Listing Services:  My listings are exposed to all of Southern California through the MLS Alliance. And nationally on the web. I make sure that the photos and remarks are the best possible.  I submit our own interior & exterior photos, and I write all the remarks myself.  1/3 of my listings are sold by out-of-area agents.
  1. Internet: warren4realestate.com (where our inventory is updated constantly), foreclosure.com, realtor.com,  century21.com, redfin.com, homes.com, mls.com, mlslistings.com, craigslist, Google, Yahoo, Trulia, backpage.com and zillow.com. To name a few and I am finding new ones all the time.
  1. Instant Response: I have licensed Realtors answering the phone from 9:00AM until 5:00pm 6 days a week.  Agents' and buyers' questions get answered now.
  1. 30 Year Agent / Lender/ Investor Network: Over the years I've built great relationships with hundreds of agents and investors.  I am known for having a good inventory in the L.A. and Orange County area.
  1. Constant Monitoring: Vacant homes are watched carefully.  I befriend the neighbors and my field rep is on the road all day, inspecting our listings.  Problems are taken care of immediately, and if there's a break-in I often have the police there in time to catch them.
  1. Open Houses: Can be arranged as necessary.  Newer agents like to hold them to pick up buyers and possibly sell the property. 
Ok
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