BUYING, SELLING OR REFINANCING?
Miami Real Estate Law Firm:
Real Estate Owned (REO) Closings
For real estate investors, distressed properties can be a great source of income. Real Estate Owned (REO) properties refer to land that has been taken back by a bank or a government loan insurer (such as Fannie Mae or Freddie Mac) in foreclosure, or a government agency as the result of tax liens. These properties can often be purchased well below market value. Banks, government agencies, and loan insurers are not designed to hold real estate, and they usually want to liquidate these assets as quickly as possible. But the unique process of buying and selling REO can impair your property rights if you do not protect your legal interests throughout the process. Consult with a Miami real estate attorney about the best way to close on REO properties.
Reo Properties Held by Banks And Government Loan Insurers
When a bank wants to foreclose on a property due to delinquent mortgage payments, it must follow state and federal laws that regulate the foreclosure process. If your mortgage is backed by a government program (such as Fannie Mae, Freddie Mac, or Ginnie Mae), the government can also foreclose on your home as a lender. Florida is a judicial foreclosure state. This means that a bank must file a foreclosure action in court and get a judgment before it can officially foreclose on a property. Once the bank has obtained a judgment of foreclosure, it is free to auction the property. Investors can purchase these foreclosed properties at auction, and the price is often well below market value. But you will usually not have the right to inspect or appraise a property purchased at auction before you buy it. This can lead to hidden costs. It is also important to understand that Florida law gives homeowners a statutory right of redemption. This means that a homeowner can pay off the mortgage, fees, and other costs in order to take back a house after foreclosure. This can be done even after the property is auctioned (so long as it is done before the sale is finalized).
REO Properties Held by Government Agencies
When a homeowner fails to pay any type of taxes, a lien can be placed on the home, and the government agency can foreclose on the home. This is most often done for delinquent property taxes. It can be done for other types of taxes as well: for example, if the IRS is owed income tax, it can – and will – place a lien on the delinquent taxpayer’s home. Because the time and expense of foreclosure are high, the IRS rarely chooses to foreclose on a property, but it does have the right to do so.
Call Us Today to Schedule a Consultation with a Real Estate Attorney in Miami
REO properties can offer great real estate investment opportunities, but they do pose certain risks to purchasers. At Costa and Associates, we have experience in mitigating the risk of REO purchases and protecting your legal rights throughout the process. Call (305) 827-0100 to schedule your free consultation with an experienced Miami real estate attorney.