How to Buy Foreclosures in the 2009 Market

Need a handle on how long it will take to liquidate your borrower’s collateral in Indiana? Since the foreclosure process officially starts with the filing of a complaint, my timelines start there. A complaint cannot be filed until there has been a default under the terms of the real estate mortgage or personal property security agreement. Needless to say, many weeks if not months might pass between the initial loan default and the decision to file suit.

The timing of the foreclosure process largely depends upon whether and to what extent the borrower contests the proceeding:

Uncontested Foreclosure: 4 - 6 months minimum. If a business debtor does not contest foreclosure (but will not agree to a deed in lieu), the process can move relatively quickly. Here are the major steps and applicable ranges of time:

1. Filing of the Complaint

2. Service of process on the debtor: occurs in 5-10 days unless service by publication

3. Application for default judgment: can be sought 21-24 days after service of process

4. Entry of default judgment and decree of foreclosure: should occur within approximately 30 days after the Application is filed

5. Praecipe for Sheriff’s sale, including notice of same: by statute, cannot be filed until 3 months after the Complaint

6. Sheriff’s sale: happens about 45-90 days from Praecipe, depending on the county

Contested Foreclosure: 6-9 months minimum. Given the vagaries of litigation, it’s virtually impossible to conclusively estimate how long a contested foreclosure case may last. Much depends upon how clear the default and the damages are. Perhaps the most significant factor relates to the time associated with workout negotiations. In that regard, each case is different. Here are the main steps of a fairly quick contested foreclosure:

1. Filing of the Complaint

2. Service of process on the debtor: occurs in 5-10 days unless service by publication

3. Appearance of debtor’s attorney and motion for one or more 30-day extensions of time to respond to the Complaint: filed 20-23 days after service of process

4. Answer to Complaint: filed 30 days after filing of Appearance and expiration of last motion for extension

5. Motion for summary judgment: can be filed immediately after the filing of the Answer

6. Objection to motion for summary judgment: due 30 days after the filing of the motion for summary judgment

7. Summary judgment hearing: usually held 75-120 days after the motion is filed

8. Entry of judgment and decree of foreclosure: occurs on day of hearing, or soon thereafter, unless the motion is vigorously contested with viable defenses

9. Praecipe for Sheriff’s sale: can be submitted immediately after the entry of judgment assuming more than 3 months have passed since the complaint was filed

10. Sheriff’s sale: takes place 45-90 days from Praecipe, depending on the county

Judicial sales. Indiana law requires a judicial sale in order to foreclose a mortgage. I.C. 32-29-7-4 (http://www.ai.org/legislative/ic/code/title32/ar29/ch7.html#IC32-29-7-4) is a nice option for creditors looking to expedite a sale. The statute permits, under certain limited circumstances, the sheriff’s sale to be conducted by a private auctioneer on the civil sheriff’s behalf. This may be advisable in counties without regularly-scheduled sheriff’s sales. (I should note that, as to personal property security interests, UCC/Article 9.1 and/or the terms of a security agreement may allow the creditor to repossess the collateral without a sheriff’s sale.)

Be prepared for delays. Although the basic procedure is the same throughout Indiana, the timing can be impacted dramatically by the dockets of the individual courts and/or the schedules of the individual civil Sheriffs’ offices. The periods described are the minimum time periods. The actual time usually is longer. This is especially true if there are multiple creditors named in the lawsuit. Further, in contested cases involving debtors represented by counsel, opposing attorneys can prolong the process in a variety of ways, including multiple motions for extensions of time, requests for discovery and vigorous challenges to a motion for summary judgment. In the event a trial must occur, a resolution of the case can be delayed several months if not years. In addition, a bankruptcy can be filed up until the time when the Sheriff’s sale begins, and that can delay the foreclosure process indefinitely.

Depending on the goals of the lender, the lawyer representing the lender can push the case aggressively toward a sale. Or, counsel can be more passive to give the parties time to assess whether a refinancing arrangement may be warranted. The parties can settle, or the debtor can redeem - real estate / I.C. 2-29-7-7 (http://www.ai.org/legislative/ic/code/title32/ar29/ch7.html#IC32-29-7-7); personal property / I.C. 26-1-9.1-623 (http://www.ai.org/legislative/ic/code/title26/ar1/ch9.1.html#IC26-1-9.1-623) - right up to the sale or disposition of the collateral. Debtors’ attorneys know this, so don’t be surprised if a borrower waits until the eve of sale either to file for bankruptcy protection, redeem or yield to the lender’s loan modification terms.

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Common Reasons People Go Into Foreclosure
 by: Lucy Landley

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If a family loses their home in Foreclosure, it is easy to
critically speculate and assume that they must have been
irresponsible with the loan payments or they bought a home
way out of their league. Despite the fact that those are
possible reasons for foreclosure, truth be told that there
are many other reasons people foreclose on a home and many
times it is out of their control. For any reason that a
person or family forecloses on a home, there is always hope
and someone to help. This is why it is necessary for
knowledgeable and equipped investors to be on their toes,
ready to help those in pre-foreclosure or those who already
are in foreclosure. Those who have defaulted on a loan could
have suffered from any of many life changing events, such as
the following:

Divorce. Divorce is a life changing issue and a split in a
household can cause people to lose their home in
foreclosure. A frequently used statistic today is that one
in about every two marriages end in a divorce, and sadly
it’s true. Divorce is undeniably a reality of our society
today. Depending on who keeps the house is the determining
factor of who will take over the monthly dues of the house.
Unless arrangements are made in a prenuptial agreement, it
is not a given who becomes the home proprietor and the legal
process of a divorce takes time. The cost of a divorce
itself can be the main cause of losing a home in
foreclosure. Poor communication in a divorce is a factor
which leads to unintended negligence and defaulted payments
as well. Naturally, there are many different divorce
scenarios that lead to home foreclosure.

Medical Reasons. Unexpected illnesses lead to a surplus of
uninvited bills and many people can’t afford these
expenses or do not have the insurance coverage to save them.
Nobody plans to foreclose on their home, just like they do
not expect to pay thousands of dollars in hospital bills.
Ideally saving money out of each paycheck to cover potential
medical expenses would be great, but that is not always an
option. Many Americans live paycheck to paycheck, barely
making the home loan payment. When a medical emergency
happens within a family, the monthly mortgage payment is put
on the back burner. Reason being that an illness can cause
emotional stress, or disable someone from working (which
leads to the next topic…)

Job Loss. Job loss is a frequent cause of home foreclosure.
The economy strengthens and weakens, and in conjunction with
that the workforce moves up and down in numbers. As the
unemployment rate goes up in a city it is safe to assume
that foreclosure numbers will raise as well. Again, ideally
one might hope to have saved enough money over the years to
cover the home loan, credit card bills, electricity, etc in
the case of job loss. However, this is not a social reality.
The many Americans who have suffered job loss cannot pay
monthly dues and they result with a default home loan, fall
in to debt, and in many cases are foreclosed on by their
mortgage lender.

Death. Death is single handedly the most detrimental
happening for a person or family. Death can, in many ways,
cause a family to lose everything…including their home to
foreclosure. Take for instance, if the sole provider of the
mortgage payments has died, then it is very likely that the
rest of that family will lose their home in foreclosure.
Unfortunately, the other spouse may be disabled or unable to
work and sadly that person is in a seemingly out of control
situation. This is where a qualified investor specializing
in foreclosure will step in and help him/her get control
again.

The reason a person or family goes into foreclosure is
important for all to understand. As a homeowner one can be
prepared for such a situation as the aforementioned, and as
an investor, one can be informed as to what causes
foreclosure and how to be of service. Death, job loss,
medical expenses, and divorce are a few of the most common
reasons people foreclose on a home. These factors are real
and an everyday part of society.

 

About The Author

Lucy Landley is a writer for the National Association of Foreclosure Prevention Professionals, and regular contributor of foreclosure related articles. For more information on NAFPP, please visit http://nafpp.org/.

 

This article was posted on April 11, 2006

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A Couple Of Seniors Do A Forecloseure Rehab

Let the fun begin

My wife, Jeanne, and I had done 2 deals before this one. The first was a “flip” which we sold in 19 days using a back-to-back closing and we used a short ad: “Handyman Special, cheap, cash, phone number”. We got over 80 calls.

 

The second was a pretty house that only needed minor fixing…we sold it after listing “FSBO” for a month or so after completion.

After two great successes, we were mailing our letters to out-of-state owners and to pre-foreclosures (Lis Pendens). We got a response from an owner was about to go into foreclosure with a private lender.

The Deal of Deals…$20,000.00 in repairs! A long story short, we finally talked to his ‘private’ lender and he indicated that he was through waiting…he was going to foreclose. He also indicated that he would not discount the note. That left us with the decision of walking away or continuing. We decided to give the owner $5,000.00 walking money, and to assume his note with the private lender. We figured it would take $15,000.00 to $20,000.00 to make the house fit for human habitation.

The Gopher factor:
Next we had to find someone who could do the work for us since neither of us are now capable of this undertaking. Luckily we had a friend who wanted to do the work for half the net and we shook hands (don’t make this mistake; sign a contract that spells out all the requirements of each). After a few days of rehab, Jeanne tripped over some debris in the driveway and broke a bone in her foot and another in her wrist. She was fitted with casts and we continued. About 7 weeks later our friend had accomplished a huge task. Jeanne and I acted as gophers and we worked the sales at Lowes and Home Depot to get some good savings.

The Hot Market and Exit Stategy # 2!
After trying for weeks to sell the place (five open houses and no visitors of importance), Jeanne and I decided we should try to lease or option the property. But, we now had partners and we had to see if we could buy them out. As it turned out, they were willing to part company for a nominal amount.

From naive senior citizens to landlords, it’s been a trip. Other than Jeanne’s breaking bones our trail hasn’t been too rocky. If we can do it, some of you youngsters can surely do so!

Submitted by:
Lew Higgins & Jeanne Nelson (semi-retirees)
Realty investing LLC
Clearwater, FL 33763

By: SpudStud

Article Directory: http://www.articledashboard.com

www.propertiesbyjeanne.com

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Posted under Foreclosures