What is a Pre-Foreclosure as seen on Zillow or Trulia or other sites? If a property is noted as a Pre-Foreclosure, it means that a Lis Pendens (or Notice of Pendency) has been filed with the County Clerk on the property by the Lender/Bank. This Notice is just to say that the Owners are behind on their mortgage and that the Lender may take foreclosure action.
Notice of Pendencies can be filed multiple times before a Lender actually starts foreclosure proceedings. If a Lender needs to proceed to formal foreclosure actions, they will file a “Foreclosure Action” with the County Clerk. There is a lot of documentation involved and a court date would be set and a judge would need to rule on the foreclosure action. After all of that is done, the ownership will pass into the name of the Lender. Once in the Lender’s name, depending on the lender and their preferred process, their Loss Department goes through a series of checks and searches on the property – appraising it, background reviews and title checks, etc. After all of those things are cleared to their satisfaction, the Lender may auction off the house on any of a number of sites or they may list the house with a real estate agent, in which case it will be available on the Multiple Listing Service (MLS).
Lis Pendens or Notice of Pendencies are not a good indication that a property will actually be foreclosed on. Even if the Lender does foreclose, the formal foreclosure process may take 1-3 years before the property would be available for purchase.
Pre-foreclosure is also not an indication that the owners even want to sell their home. Buying a house from a seller that is in pre-foreclosure is called a “Short Sale” and the Lender must approve the owner to sell their home as a Short Sale, including providing financial information to support that the owner cannot pay their mortgage or catch up on past due amounts.
If you want any further information, or you’d like help purchasing properties that have already been foreclosed on and are available for purchase, please feel free to contact us at (585) 421-5170.