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Ask even the least experienced real estate novice and he or she will tell you that the latest trend in the real estate market are Philadelphia Foreclosures and Philadelphia short sales. Philadelphia Foreclosures have been hot since the housing market crash because buyers believe that they will be able to purchase homes at deeply discounted prices. This article will give a brief into to Philadelphia Foreclosures and other types of distressed properties.
Distressed Property – A distressed property is a property in which the borrower (home owner) begins missing monthly mortgage payments and has defaulted on his promissory note. For real estate purposes short sales,Philadelphia Foreclosures, and REOs qualify as distressed properties. Philadelphia Foreclosures and other distressed properties typically sell for a price below fair market value.
Short Sale – A short sale is any sale of real estate in which the proceeds from the sale of the property are less than the outstanding debt on the property. A short sale occurs when the debt holder agrees to release all liens against the property in exchange for an amount less than the total amount owed by the owner.
Philadelphia Foreclosures – A foreclosure is actually a legal process that occurs whenever a lender, usually a bank, attempts to recover the balance of a loan from a borrower (homeowner) who has ceased paying his or her debt. At settlement buyers sign both a promissory note and a mortgage. The promissory note is the contract that governs the terms of borrowed money and it includes things like the amount being borrowed, the interest rate and the repayment schedule. The mortgage is the document that puts the property being purchased as collateral for repayment of the loan. If the terms of the promissory note are not met the lender can use the mortgage to foreclose on the property and gain possession. Once the lender has possession of the foreclosed property the lender will usually put the property up for sale as a Philadelphia Foreclosures and keep the proceeds from the sale.
REO – REO or “real estate owned” refers to foreclosed properties that are owned by banks. Philadelphia REO is synonymous with Philadelphia Foreclosures. Once a borrower misses one or more monthly mortgage payments the lender will assess the amount of equity in the property and decide if a short sale is appropriate. If the property does not sell as a short sale and subsequently does not sell at sheriff’s sale the lender retakes possession of the property and it becomes part of the bank’s REO inventory.
About The Author: Understanding the process of buying Philadelphia Foreclosures can seem daunting but is really pretty simple if you read and follow this advice from Philadelphia Real Estate expert Frank L. DeFazio. Learn more about Philadelphia Foreclosures?