Typically selling for 35% less, homebuyers think they can find a bargain by searching for a house in foreclosure. However, a home with multiple, costly repairs, homeowners association bills, or potential liens, that may take months to become available may not be a dream come true, after all.
A foreclosure is a house once owned by a homeowner but title is now held by the bank because the homeowner has defaulted on their mortgage.
It is commonly thought that the bank takes back their property, but in actuality, the bank never owned the property. They foreclosed on and acquired the property from a foreclosure sale. If a homeowner stops paying their mortgage, the lender can foreclose on the home.
Reasons Why Homeowners Go Into Foreclosure:
- They were laid off from their jobs or fired.
- They have a medical condition that prevents them from working.
- The company they work for transferred them to another state.
- Excessive bill or debt.
- The home has significant maintenance issues the homeowner cannot afford.
Foreclosures and Its Effect on the Title
A homeowner can live in the home for the duration of the mortgage or the homeowner can sell the home and pay off the unpaid balance from the proceeds from the sale. However, some home owners run into financial trouble preventing them from making payments. Some may take out a 2nd mortgage for extra cash, making it even more difficult in that they then have two mortgages to pay.
Any claims against the house cloud the title and make selling it more difficult, especially where the debt exceeds the value of the property.
Some foreclosures can drag out and can complicate clearing title to a buyer. Delivering clear title to the buyer is essential. Without clear title, the house cannot be bought or sold in the usual course.
Homeowners may try to stay in their homes and avert foreclosure by seeking a loan modification.
Florida National Title has years of experience guiding Florida homebuyers through the real estate purchase and refinance experience and have helped them solve the problems that come up in the process. We will decipher the “legalese” and explain what we need and why we need it each step of the way. The blogs to follow will address specific issues to guide buyers to understand the process better and to help them avoid many of the pitfalls.
Florida National Title Services, LLC
250 S. Central Blvd., Suite 101
Jupiter, Florida 33458
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