Pre-Foreclosure Sale

Sam · Posted: Fri Apr 09, 2004 1:24 am Post subject: Pre-Foreclosure Sale

Your mortgage lender may choose to foreclose your property when you fail to pay your monthly mortgage payments. This means that the lender or the mortgage company can take over your property. In such a case, you can request your lender to restructure your mortgage or modify the terms and conditions of the loan. For instance, he may lower the rate or extend the loan period in order to help you avoid foreclosure. You may also refinance your loan and create a new mortgage on the same property with favorable terms.

If no option works out, you can opt for a pre-foreclosure sale of your property. Through this process, your loan servicer or lender sells the property at fair market value and accepts the proceeds as the mortgage payment. The sale may not provide you with enough cash to pay down the loan, but it will save the lender from paying the costs of foreclosing and selling. This also helps to prevent any negative item being shown on your credit report. But there are certain criteria depending upon which you may qualify for a pre-foreclosure sale.

Some conditions under which you can sell off your property prior to a foreclosure are given below.

The appraised value of the property is minimum 70% of the amount you owe and the sales price is 95% of the appraised value.
You have been delinquent on your loan payments for at least 2 months prior to the closing date of the pre-foreclosure sale.
You can convince the lender or the servicer that you will be selling off the property within 3 to 5 months.

How foreclosure affects borrowers

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