- A home is in pre-foreclosure when the homeowner has been notified by the lender with a Notice of Default (NOD). This occurs when a homeowner is unable or unwilling to make mortgage payments on his home.
- When a homeowner is in the pre-foreclosure period he has three options, to come clean and make up his mortgage payments, sell his home and pay off his mortgage in its entirety or head to foreclosure.
- A home may qualify for a pre-foreclosure sale if he meets the following four requirements: First, the appraised value of the home must be at at least 70 percent of the amount still owed on the mortgage. Second, the sales price of the home must be at least 95 percent of its appraised value. Third, the homeowner must be at least 2 months in default prior to the actual sale of the home. Fourth, the home has to sell within the time period allotted by the lender (typically a 3 to 5 month period).
- The failure to meet the requirements for a pre-foreclosure sale would mean that a homeowner's home will head to foreclosure if the homeowner cannot make up his mortgage payments.
- Having the chance to sell a home in a pre-foreclosure sale enables the homeowner to meet his mortgage requirements if the home sells and avoid damage to his credit rating.
- When a homeowner is unable to make his mortgage payments, his best option is a pre-foreclosure sale. Unfortunately when a home has lost its value a pre-foreclosure sale is not usually an option. If the pre-foreclosure sale requirements are met, however, everyone involved is capable of coming out a winner in an unfortunate situation.
