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September 25, 2008

More Comments on the Foreclosure Article

A blog reader sent me the following comments on the foreclosure article in the Trib…

“The little disclaimer at the bottom of the graph states “The firm’s data does NOT include trustee’s deeds that transfer property to third-party buying it at public auction.” So any foreclosed property that went to an outside bidder or to a junior lien-holder is NOT reflected in the data. This skews the data a little.

A Notice of Default (NOD) is not a “Foreclosure”. It is not a foreclosed property until it is sold at auction to the highest bidder, be that the foreclosing lender or third-party bidder.

A NOD is the first of three steps in the foreclosure process. A NOD might be filed an a single house three different times or two times by the senior and junior lien-holder. This doesn’t mean three or four homes are in foreclosure, but the data provider and reporter make no distinction between NODs filed and the actual number properties in the foreclosure process.

An other bit of the puzzle they leave out that is that is the “Deed-in-Lieu of Foreclosure.” When a borrower gives up and the lender is willing to accept it, the borrower simply signs over the property to the foreclosing lender, bypassing the whole process. The end result for the lender is a REO, but there is no Trustees Deed filed.

I personally have seen properties with six NODs, five Trustees Sales Notice, five Cancellations of NOD, and finally one Trustee’s Deed.”

Written by Keith Byrd - Go to Keith's Website/Profile

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