What are pending foreclosures?

Pending foreclosures are properties that are currently in default and are being advertised for foreclosure sale to the public by the lender.

Is this a good time to buy?

The dramatic increase in foreclosures has increased the opportunities available to investors, homebuyers and other real estate professionals. Lenders are far more agreeable to alternatives, often offering substantial discounts on loan payoffs and/or terms and steeply discounted bid prices at auction.

How does the process work in Georgia?

Georgia is a non-judicial foreclosure state. Lenders are not required to obtain a judgment in order to foreclose. In Georgia the borrower (mortgagor) gives legal title to the lender (mortgagee) through an instrument known as a “Security Deed”. On virtually all Security Deeds in Georgia the borrower is required to waive their right to judicial foreclosure by signing a “Waiver of Borrower’s Rights”. The lender’s ownership interest in the property remains until this debt is paid in full or is released. If the borrower fails to pay, the lender may declare the Security Deed in default. To enforce default in Georgia the lender must make written demand to the borrower and may accelerate the debt. After the lender has declared default they must follow the statutory notice and offer the sale of the property to the public. This process is accomplished by the lender publishing a Notice of Sale under Power in the designated legal organ of the county where the real property is located for 4 consecutive weeks immediately preceding the first Tuesday of the month (the auction date). All foreclosure sales in Georgia are held on this set date on the Superior Court steps of the particular county between 10:00 AM and 4:00 PM (the legal hours of sale). In this Notice of Sale under Power the lender must reference the date, time and place of sale along with a description of the property, the names of the mortgagor and mortgagee and make reference to the Power of Sale contained in the Security Deed.

How are properties sold at auction?

At the foreclosure sale the lender’s attorney must “cry the bid” to the public. The opening bid is placed on behalf of the lender and the amount generally includes the remaining principal balance of the loan, back payments (usually 4 to 6 payments in arrears), accrued interest and attorney fees. Successful bidders at the auction are required to tender the full amount of their bid in cash or certified funds immediately upon the conclusion of the sale. Once the sale is complete the attorney prepares and issues to the winning bidder (most often the lender) a Deed under Power of Sale which is recorded in the county real estate records. This deed transfers property ownership to the winning bidder. There is no right of redemption in Georgia. The owner may not reclaim the property after the sale. Foreclosure sales are final but Georgia does give the lender the right to rescind the sale within 30 days so long as title has not been transferred to the successful bidder.

What happens if there are junior liens or 2nd mortgages on the property?

Foreclosure sales in Georgia extinguish any liens junior or subordinate to the lien being foreclosed and conversely are sold “subject to” any liens senior to the foreclosing loan with the following exceptions. IRS liens remain on the property for 120 days after the sale. The IRS must take action to protect its interest during this period or this right of redemption is waived. Foreclosure sales are always sold subject and subordinate to any lien of record recorded prior to the foreclosing lien. Unpaid real estate property taxes fall into this category and are also always senior in priority.

What investment opportunities or bargains do foreclosures create?

Increasing foreclosures also increase the opportunities available to homebuyers, investors and other real estate professionals. Generally, there are 3 areas of foreclosure investing:

Pending Foreclosure: During the monthly advertising stage owners facing foreclosure are often eager to sell their property. Besides the constraint of time, the sale of real property facing foreclosure is no different than any other real estate transaction. The owners of these properties have full right to sell and are not restricted by the pending foreclosure status. Generally the remedies available are to sell the property and have the purchaser cure the default and take title prior to the auction, make up back payments to re-instate and cure the default themselves, work out a loan modification or re-payment plan with the lender or file bankruptcy. As foreclosures have increased, lenders are becoming far more agreeable to alternatives, including discounting the loan amount and/or allowing a qualified contract to stop the sale. These alternatives, commonly referred to as a “short sale”, are providing greater opportunities for the home buyer, investor and realtor.

At Auction: Pending foreclosures that are not cured prior to the first Tuesday of the month are offered to the public at the foreclosure auction. The normal opening bid includes all past due payments, interest, penalties and attorney’s fees. However, in the current market lenders are now offering “directed bids” to the public. These opening bids, like short sales, are offered for less than the total amount due to the lender. Buyers with available, secured funds often find this the least stressful method of obtaining foreclosure properties. The auction sale provides buyers a method of obtaining properties outright, without the need for negotiation with owners and realtors. This method is truly “Buyer Beware” and third party bidders are looking to buy at the lowest price to value possible. The purchaser rarely has the opportunity to closely inspect or know the true condition of the property. Research is the key to success. Be sure to have a title search completed prior to the sale. Know the position of the loan and be aware of any senior liens that would not be extinguished through the foreclosure sale. Once the sale is complete, the attorney prepares and issues to the winning bidder a Deed under Power of Sale which is immediately recorded in the county real estate records. This deed transfers property ownership to the winning bidder.

REO (Real Estate Owned/Bank Owned): With foreclosed property portfolios growing, lenders must dispose of these non-performing assets as soon as they can. Contrary to popular belief, property ownership creates expenses and losses no lender wants to incur. While all pending foreclosures do not result in foreclosure, normally 30%-50% will. Lenders are becoming increasingly eager to sell these properties and it is common for them to accept offers for less than their bid at auction after the foreclosure sale is completed. REO properties also create opportunities for Realtors to list these properties on behalf of the lender and enable them to find the best deal possible for their buyers and investors.

If I buy a property at auction, can the former owner get it back?

There is no right of redemption in Georgia. The owner may not reclaim the property after the sale. Foreclosure sales are final but Georgia does give the lender the right to rescind the sale within 30 days so long as title has not been transferred to the successful bidder.

What unique values and benefits does Equity Depot offer?

Foreclosure notices provide very limited information for investors, home buyers, realtors, lending and legal professionals. Equity Depot fills those gaps in real time, usually on the first day county foreclosure notices are run, by providing researched data including complete address, mortgagor/mortgagee detail, lender, attorney and attorney contact information. Equity Depot provides mortgage research that is unavailable through other sources including the original mortgage amount, type, lien position and origination date. Property value information is displayed including tax appraised value, previous sales data and property details such as subdivision, zoning, bedrooms, baths and square footage. All of this in an easy to use, web-based interface that gives subscribers the ability to determine which properties match their individual needs and provides the greatest investment opportunity.

In addition to complete, timely, researched and accurate foreclosure data, Equity Depot subscribers have access to a 5 year history of pending foreclosure activity, complete tax role data, current bankruptcy data and mortgage histories. Individually, any one of these enhancements would be far more expensive to obtain than a subscription to Equity Depot.

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Next AFR: Dec 13, 2024
Next Auction: Jan 7, 2025