Types of Foreclosures
Posted by Tim Ryan on Monday, December 19th, 2011 at 1:33pm.
Exploring Three Common Types of Foreclosures: VA, FHA, REO
When it comes to purchasing a foreclosure, many people are surprised to find that there are actually several different types of foreclosures that can be explored. Depending upon the type of foreclosure you are pursuing, the requirements and procedures can be quite different. Whether you're searching Denver CO luxury condos or a new home in Naples, here is a look at three of the most common forms of foreclosures most buyers will encounter.
VA Foreclosures
A VA foreclosure is a foreclosure that takes place on a home that was purchased with the help of a VA, or military, loan. Anyone interested in purchasing a VA foreclosure will first need to search for a home on the homesales.gov Website. After finding a home, the interested buyer must have a real estate agent prepare an Offer to Purchase And Contract of Sale VA form. This form and all necessary documentation must then be submitted to the listing broker for approval.
FHA Foreclosures
Homeowners who purchase a home with the help of the Housing and Urban Development program purchase their homes with FHA loans. Those who default on their FHA loans may go into foreclosure. After defaulting on an FHA loan, the home becomes government-owned. In general, these Naples homes come on the market with an initial bid period that ends on a Sunday.
Available FHA foreclosures can be viewed at homesales.gov. If someone is interested in purchasing one of these homes, the bids must be placed online by a real estate broker. Generally, these homes are sold during what is referred to as an “Offer Period.” At the end of this period, the highest reasonable offer is accepted. The winning bidder is generally notified within 48 hours, after which the necessary paperwork can be completed. If the home isn’t sold during this Offer Period, interested buyers can continue to submit bids until the home is sold. These bids can be submitted on any day of the week, including weekends and holidays.
FHA foreclosures offer a couple of distinct advantages. First, these homes provide an up-front inspection that can help identify certain issues right away. Second, as an FHA home, the home may be FHA insurable.
REO Foreclosures
Real Estate Owned, or REO, foreclosures are those homes that were foreclosed upon and are now owned by the bank. These homes were purchased by homeowners through traditional means, such as through a bank, a lender or a trust. After the owner defaulted on the loan, the bank, lender or trust regained ownership of the property. The bank, lender or trust then puts the home up for sale in an attempt to recoup money the money that was loaned to the homeowner.
Since REOs may be owned by any number of different banks, lenders or trusts, the procedures and requirements for purchasing one of these homes can vary significantly. Therefore, it is essential to work with a knowledgeable real estate agent who can help successfully navigate through this sometimes confusing process.
About The Author - Brian Kinkade specializes in Colorado luxury condos, such as Arete Condominiums Boulder, as broker for The Home Cart in Denver.
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Posted on Saturday, January 14th, 2012 at 12:26am.