Foreclosure is the legal process by which a mortgagee, or other lien holder, usually a lender, obtains a court ordered termination of a mortgagor's equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lien holders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue homeowners' association dues or assessments.
The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing 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". If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgment.
In all of Eagle County there were 452 foreclosures initiated in 2009, 618 in 2010 and 615 in 2011 - some sold at auction, some cured and some still in the foreclosure. There have been 179 so far in 2012 (as of 5/13).
To see what properties have gone through the foreclosure process and are Bank Owned properties currently for sale in Eagle County see Bank Owned and Short Sales.
The process is complicated. I can shed light on the process if you want to contact me.
Bank Owned Property, sometimes referred to by banks as an REO (Real Estate Owned), in the case of foreclosuses, is real estate that has gone through the entire process, has been offered for sale at a public auction and no buyers have bid a higher price than the initial bid estabilshed by the first lien holder. So the bank now owns the property and will probably try to sell this in the open market to recover some of their losses.
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than would result from foreclosure or continued non-payment. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.
Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price Opinion (abbreviated BPO or BOV).
Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from mortgage failures that in part triggered the Financial crisis of 2007â€“2010, they are now more willing to accept short sales than ever before. For "under-water" borrowers who owe more on their mortgage than their property is worth and are having trouble selling, this presents an opportunity for them to avoid foreclosure as a result.
Choosing a RealtorBe sure to pick a professional, full-time REALTOR and not just a Real Estate Sales Agent. A REALTOR has access to all the properties in the Multiple Listing Service and can therefore provide you with the greatest number of options for homes that match your criteria. Interview 2-3 REALTORS, preferably in person, but at least by mail/email. Determine their experience, education and service philosophy. Do they know the entire area? What kind of support staff do they have? Do they have an online brochure so you can read up on their qualifications. What do their clients have to say about their service and knowledge?
Karen Wilhelm, MBA, MRE, CRS, GRI has earned a "Short Sales and Foreclosures Resource Certification" and she is a "REO Specialist".
What is the real estate market like today?Your REALTOR will provide you with complete information on this question. You can also view this website's market reports for many of the Vail Valley areas to see the sales for the recent past.
Making an offerThere is a history of sales and listings that gives your REALTOR an excellent idea of what the market is today. Your REALTOR will act as an intermediary between you and the sellers agent so that negotiations are tempered with local market knowledge and separation of personalities.
What resources are available?Check the following online references to find the information you seek:
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