The difference between government foreclosures and bank foreclosures has to do with who issued the mortgage on the foreclosed home in the first place. A foreclosure occurs when a homeowner defaults on their mortgage loan. In order to collect the money still owed on the mortgage, the lender will seek to repossess the property and sell it, either through a public auction or an REO sale.
The two most prominent lenders in the nation are banks and government agencies. These are the sources for which most people find home loans to buy homes. Therefore, i If you default on a mortgage loan you've received from the government, then the government agency that issued the loan will seek to foreclose in order to get back their money. If you secured your mortgage from a bank, then it's the bank who that will come looking to foreclose should you default.
Bank foreclosures and government foreclosures follow the same general outline, but there are some differences. In some cases, a government lender might may be more willing to work with a homeowner to help them avoid a foreclosure and stay in their home. Solutions to this might may be loan modification, refinancing or an alternate payment plan for the default debt.
This can sometimes mean that the timeline for a government foreclosure can be longer than a bank foreclosure. Bank foreclosures often move more swiftly, going from the default to the sale in a much shorter amount of time than a government foreclosure.
Government foreclosures can be properties under mortgage from the FHA, HUD or VA departments, and each agency will have its own procedures for securing a foreclosure sale. Familiarizing yourself with these processes is important. Knowing the timeline of the foreclosure process will ensure that you get everything you need done before the sale.
Whether you're looking to buy at auction or buy government foreclosures or bank foreclosures directly from the bank or agency, getting in touch with the lender to learn more is always a good idea.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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