Foreclosure, Short Sale, & Deed in Lieu Information
Scroll down to subject that you are interested in reading. Here, you will find a brief synopsis of foreclosure (non-judicial foreclosure in Georgia), how to short-sale your home, deed in lieu of foreclosure (sometimes called deed in lieu of sale), and bankruptcy information. Also, visit the frequently asked questions page for some additional answers to your questions.
(Non Judicial) Foreclosure in Georgia
***READ THIS CAREFULLY*** Unless you show up with cash in hand and your due diligence completed, then you are not prepared to buy at the foreclosure auction on the courthouse steps. It is entirely possible that you could lose your money and have nothing to show for it. Please know what you are doing prior to participating.
Everyone has heard the news; foreclosures are on the rise. This seems to be the case virtually everywhere. The Cobb County foreclosure rate has been increasing for the last several years, September 2011 being the worst in recent history.
Cobb County Real Estate Foreclosure Charts
Data for both charts come from the monthly notices of sale as published in the Marietta Daily Journal. Due to a catastrophic data loss, several months are estimated from previously published charts (error of +/- 10 properties). There was no data recovered for July and August 2008 and May, October, and November of 2009 (these months were averaged from existing data). The vertical axis is the number of properties advertised. The horizontal axis is a monthly time line from January 2005 to April 2011. The straight red line (above) is a linear trend line and pretty much tells the tale. As with all raw data, there are several variables that have not been isolated. Regardless of the qualifiers, the trends in both charts are still readily apparent. 2012 is starting to show a declining trend for Cobb County foreclosure listings.
This chart shows a year over year comparison of foreclosures in Cobb County by month. September 2011 set a record for the most number of properties advertised for foreclosure in Cobb County, GA (1,978 homes). Note the declining trend in 2012.
Foreclosure Bargains in Metro Atlanta
As a Buyer, bargains abound in the foreclosure market. Competition is stiff for this type of investment property and it is going to take a professional Georgia real estate agent to cull the wheat from the chaff.
While learning about foreclosures and how they can play a part in your portfolio of real estate investments, it is important to understand that the previous owner was in financial distress and there is a better than average chance that the property is going to require some work. If you are willing to put "sweat equity" into the property (ie, do it yourself) then you have just created an excellent financial opportunity. Alternatively, you can purchase a foreclosure after a rehab specialist has already performed the work required to make it a "turn key" property. In the end, realize that you will rarely find a property that is cheap AND in perfect condition. If they are out there, we will find them. Contact us for more information on foreclosed properties in Cobb County and the entire metro Atlanta area.
The Cobb County Foreclosure Process
The following list applies to foreclosures in all Georgia counties:
- The debtor ceases to make timely mortgage payments.
- The mortgage company issues a Notice of Default (NOD).
- The notices of sale begin to appear in the Marietta Daily Journal once a week for four weeks.
- On the first Tuesday of each month (New Years and July 4th can cause it to be held the following day), between the hours of 10:00AM to 4:00PM, the property is auctioned off to the highest bidder on the court house steps for cash.
- If no one bids on the property then it goes back to the lender to be processed as Real Estate Owned (REO). From there, it is widely held out as a foreclosure--even though the action has already taken place.
Metro Atlanta Short Sales
Asking full value in Georgia's real estate market is probably not going to benefit a distressed homeowner. Homes aren't selling as fast as they were a year ago and it is going to take a reduction in price to land a ready, willing, and able Buyer. The problem is that there is no room to drop the price. In some cases, the Seller owes more than the fair market value of the home. This is where a short sale can benefit the Seller.
The short sale requires a willing Buyer to purchase the property. It takes a qualified Realtor to facilitate a frequently rough and time consuming process. In the end, the lender and other concerned creditors agree to recover less than the amount they are owed as a hedge against foreclosure (where they risk losing everything). For example, the debtor owes $180,000 on the mortgage. After an extensive amount of skilled negotiations, the lender agrees to accept $150,000 and will then release their interest in the subject property. In this example, the shortage amount is $30,000. In years past this $30,000 could cause a taxable event to the debtor. With recent legislation, it is no longer a concern (as always, consult your tax adviser for more information).
Deed in Lieu Foreclosure
The deed in lieu of foreclosure is a choice the distressed homeowner may wish to explore directly with their mortgage company. In this case, a home owner essentially walks away from the property by surrendering the title to the lender (sometimes called a "Deed for Keys").
The deed in lieu of foreclosure occurs more frequently in states that utilize judicial foreclosure proceedings. Also, if the property is encumbered by more than one lien then the lender will probably not accept a deed in lieu of foreclosure. Bear in mind that Georgia is a non-judicial foreclosure state. As such, a deed in lieu of foreclosure is most likely not an option for the debtor.
If the lender accepts a deed in lieu it is in the debtor's best interest to read through the contract to make sure that it is "without recourse." This means the lender will take no further action to collect from the debtor.
Often, people confuse bankruptcy with foreclosure. These are two very different actions. Both are devastating to the debtor's credit. Contrary to negative opinion, bankruptcy is often a necessity for homeowners facing insurmountable debt. It is most certainly an unpleasant situation and does not cure the problem by simply dissolving debt. There are many complexities in the new bankruptcy code making it imperative to contact a professional who can provide real help in an already tough situation. While we cannot provide any legal advise, our company works closely with an excellent real estate law office in Atlanta. Give us a call and we will point you in the right direction.
We are Cobb County's Short Sale Specialists
A short sale is not a simple undertaking and you will need professional representation. If you find yourself in distress and need to discuss your options give us a call or contact us immediately for help. A short sale may or may not be in your best interest and talking to a real estate professional will help you make an educated decision. You can expect to hear a respectful but frank discussion of your options. Taking the pro-active step of picking up the phone and calling will put you considerably further ahead of your troubles than the stark denial of an already tough situation.
A surprising number of distressed homeowners do not attempt to sell their homes in a timely manner prior to losing their house to foreclosure. Understandably, there are situations where the homeowner is overcome by events beyond their control. But if there has been a diminished flow of income or the monthly mortgage payment increases dramatically, then it is time to get help before an unwanted remedy is forced upon you.
So Which is Better?
Here is a question we are asked all the time: Which is better; a deed in lieu of foreclosure, a short sale, or a foreclosure? What most people are really asking is "how does this affect my credit?" All three can have a tremendously negative impact upon your credit. However, a foreclosure will hurt far worse.
Unfortunately, as mentioned before, if you live in Georgia, a deed in lieu of foreclosure is not likely to be an option. As a non-judicial foreclosure state, Georgia lenders have the ability to rapidly foreclose upon the debtor. Additionally, the foreclosure action serves to wipe out many of the liens that affect title. From the lender's perspective, this is preferable to a drawn-out negotiation for a short sale or deed in lieu. The short sale might be your best option and certainly worth exploring prior to losing your home to foreclosure. If your credit rating is important to you. there is even a way to preserve your credit by taking back the shortage amount as a personal loan that can be repaid over time.
Don't Believe the Hype
This paragraph was written because an internet search on avoiding foreclosure revealed multiple scam websites designed to rip off desperate homeowners. They provide compelling but false information on how to beat the system. Don't do this to yourself and your family. If you are unable to pay the mortgage, then you are already in a tough situation. Falling prey to con-artists promising to keep you out of foreclosure is a fiction that will cost you money and time that you do not have. There is even a scam out there that claims mortgages are illegal (Hint: they aren't). If it sounds too good to be true, it is. Nobody is going to pay your mortgage for you. The lender is not going to walk away from the delinquent mortgage. The government (despite wide media attention) is not going to bail you out-- an entirely different rant for another time. Please seek help immediately.