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Understanding Foreclosures

It is an unfortunate commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate “bonanza”, many people go to any lengths available to get into the market through investments in vacation homes, rental housing and trading up to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. It is possible that neither will occur and borrowers may be faced with large balloon payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner’s financial situation improves.

Let’s say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the county recorder’s office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before.

After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes on the block. At the sale, buyers must pay the amount of their bid in cash, cashier’s check or other instrument acceptable to the trustee. A lender may “credit bid” up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

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HI My name is Steve Woodhatch from Sydney Australia.I have bought and sold many properties right across Australia. I am writing of my experience with Dan Reedy from MORE Property. I bought 3 properties from Dan Reedy,and had never bought in USA or knew much about Kansas City Mo,till I heard Dan Reedys radio show. After listening and thought this guy knows what he is talking about I dropped him an email,and made the long trip From Australia to Kansas City mo. I also went to about 4 other states and spoke and looked at many properties,but I found Dan to be the most ethical and Knowledgable as regards the many different markets in Kansas city from Properties in the hood right up to the most expensive suburbs.I will be buying more from Dan. And his wife Nancy is very proficient in accounts and the rental side of the buisness which is one of the most important parts of owning Real estate. Kind Regards Steve Woodhatch Sydney,Australia Steve Woodhatch
It is with much pleasure that I write this letter of recommendation regarding Dan Reedy and his agency, MORE KC. As an overseas investor, finding excellent management was crucial for me, and I feel very fortunate to have Dan and his team looking after my properties. He and his wife Nancy offer a complete real estate service, ranging from rehabbing, to carrying our repairs, finding tenants, and managing the tenancies. Dan is an excellent communicator, which is of paramount importance to the overseas investor. Whenever I have cause to email him, he invariably replies on the same day, and more often within the hour. If urgent repairs need to be carried out, Dan always manages to sort things out immediately, and I always receive his friendly email saying ‘all done’ once things are back in order. Nancy runs the rental side of things like clockwork, with rental statements always delivered on time. The Property Ware software used by MORE KC is brilliant, and because Nancy and her team are vigilant about keeping it up-to-date, owners can log in at any time to check on the current state of bills, repairs, payments, leases etc. I have no hesitation in recommending MORE KC to any property investor, and particularly to out-of-state and overseas investors, who can feel confident that their properties are in good hands. Yours sincerely, Diana Masters Diane Masters
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