Statistics from the government show that the number of home repossessions has gone up by 45 percent. Repossession can happen for many different reasons, like divorce, credit card debt, illness, secured or unsecured debts, or separation.
When a borrower misses two payments, the lender can legally start the process of taking the car back. The borrower falls behind with the lender after the first missed payment. The lender must then be contacted and a new payment plan set up. If the borrower doesn't get in touch with them or can't make the payments and misses a second payment, the lender can start the process of taking back the home.
The first step is for the lender to send the borrower a letter telling them they have seven days to pay or come up with a payment plan. If this is not possible, lawyers will go to court to try to get an order to take back the home.
Most of the time, the court will try to make sure that taking back a house is the last option. But if the borrower is found to be unable to pay back the loan, including arrears and penalties, he will be given an eviction notice and given a date to leave the house.
The mortgage lender is now the legal owner of the home that was taken back. The lender can then tell a real estate agent to put the house on the market or hold an auction to sell it.
First-time homebuyers can look into these properties, which can be an affordable option in a market where prices are going up.
You can make an offer on a house that has been repossessed, but the lender may decide to put a "notice of offer" in the local paper. This says that if a better offer comes in by a certain date, the lender will accept it.
Before, auctions were mostly used by investors who wanted to buy a house and then sell it for a profit. Now, though, people who want to get on the "property ladder" but may not have enough money for a normal purchase can do so at auctions, where the houses are usually sold for less than their market value.
One more benefit is that the bidding is done in a public place, so everyone knows the price and doesn't have to bid "over the odds" to get the sale. Also, the process is much faster than a normal sale. It usually only takes a month from the sale to the move-in date.
There are, however, other things at play. A home that has been repossessed may need repairs or renovations, or it may have a bad credit rating tied to the address, which can be fixed by contacting the appropriate credit reference agencies.
Local phone books have lists of auctioneers, but it's also a good idea to talk to estate agents and mortgage lenders, who have a vested interest in the sale of any repossessed property. However, mortgage lenders can be secretive about their involvement in house repossessions because they care about their reputation.
There are many services on the Internet that can give you lists of foreclosed homes, but these are likely to get a lot of attention because you might be able to buy a house for less than its market value.
