how does one get into a foreclosure situation?

[theGlove]

couldn't they at the very least sell off their home before that?

 

[imported_weadjust]

Take out a couple of loans for 120% of the value of the home and quit making payments.

 

[SSSnail]

Buying things they can't afford? Buying into the "get rich quick" scheme with uneducated guesses?

 

[iRONic]

If they're upside down on the mortgage selling is difficult.

 

[JeffreyLebowski]

Originally posted by: theGlove

couldn't they at the very least sell off their home before that?

That's not as easy as you think. There are several homes in my area that have been for sale for over a year.
Let's face it. If you are not able to make the payments on your house you aren't going to be able to spend the money needed to get the house in shape to present it to buyers. It's a catch 22. You'r eonly hope is one of those We buy your house things, and you better have some equity in the house because they are going to low ball you by at least $25,000

 

[shortspanishguy]

In todays market homes are not selling like hotcakes. Many subprime borrowers got mortgages in past years that were fixed with a decent rate and then it would adjust in 2 years.

Now '07 is here and subprime lenders are dropping or tightening lending criteria so these borrowers with poor credit most likely will not be able to afford these homes when their interest shoots up 2-3%.

added: These people with poor credit who are looking to get out of these 2/28 loans will not be able to because of the new standards. When Loan officers get these 2/28s for these people they are supposed to work on their credit during that period. It seems 2 years rolls by and they still have a 580 FICO and then they = F*CKED.

 

[Fern]

Originally posted by: theGlove

couldn't they at the very least sell off their home before that?

Sometimes you can't. And if buyers get wind of it, that makes it harder to sell. Joe Kennedy said "only fools hold out for top dollar". There a lot of fools.

I've seen sellers hold out for a good price, maybe negotiating with 2 or more potential purchasers. But if you can't close the deal b4 notice of forclosure is issued (actual foreclosure w/b still be months away) the purchaser will always find out. Their lawyer in closing will see it filed at the courthouse. "Deal killer"

Sometimes your property FMV is less than the principal balance. In taht case your screwd too.

Fern

 

[GuitarDaddy]

It's quite common in housing market bust situations. For example you buy a house at $300k and finance $275k, a few years latter due to a market bust plus poor maintenance the house has a FMV of $225k and you still owe $265k, and you loss your job and can no longer make the payments and your credit is shite. Bingo, your only option becomes foreclosure in many cases.

Thats one of many possible schenarios

 

[her209]

Poor planning.

 

[JS80]

Originally posted by: her209
Poor planning.

/thread

 

[lokiju]

More pride than common sense.

 

[GuitarDaddy]

Originally posted by: her209
Poor planning.

"More pride than common sense"

Add "failure to except the reality of the financial situation"

And these three probably account for 90% of foreclosures, but there are certain cases of bad circumstances that make it unavoidable for even prudent planners such as a combination of factors including: long term loss of employment, catostrophic medial problems, unforeseen market depression, etc..