What Are The Signs Your Property Is In Distress?
Before an event of default on a loan occurs, there are several warning signs that there might be problems ahead. In San Diego, the most obvious is repeated slow, late payments from a borrower. The real estate taxes might not be kept current as well. There may be frequent and prolonged lease vacancies which begin to impact mortgage payments. Read more.
What Is A Loan Workout Or Modification?
Mortgage foreclosures can be expensive and protracted legal proceedings. Foreclosure in many states involves prolonged litigation, with the attendant expense of attorneys’ fees and costs. During the time litigation is pending, unpaid interest is accruing on the loan and the real property taxes may fall delinquent. In addition, the borrower can file a petition for bankruptcy even after the foreclosure process has been pending for some time, causing further delays. Some states require transfer taxes be paid by a lender once the property is acquired through foreclosure. In many situations, the time and expense of a mortgage foreclosure does not make sense if there is a way to reach an agreement with the borrower short of litigation. Read More.
Why Would A Lender Choose A Workout or Modification?
Mortgage foreclosures can be expensive and protracted legal proceedings. Foreclosure in many states involves prolonged litigation, with the attendant expense of attorneys’ fees and costs. During the time litigation is pending, unpaid interest is accruing on the loan and the real property taxes may fall delinquent. In addition, the borrower can file a petition for bankruptcy even after the foreclosure process has been pending for some time, causing further delays. Some states require transfer taxes be paid by a lender once the property is acquired through foreclosure. In many situations, the time and expense of a mortgage foreclosure does not make sense if there is a way to reach an agreement with the borrower short of litigation. Read more.
When Is Foreclosure A Better Option?
Even though a mortgage foreclosure might be time consuming and expensive, there may be very good reasons not to do a workout. The first and most important is the “bottom line” — can the real estate effectively be turned around and result in repayment of the loan more efficiently than dealing with a weak borrower for years? Is there a relatively strong market for this type and location of real estate? Sometimes in a strong market, it is worth going through a foreclosure if there is a strong likelihood of a quick sale at a good price which will result in full repayment of the loan. Read more.
If you need answers to these bankruptcy questions, contact our office today.
