In New Hampshire, foreclosure is done by various methods which include Judicial or Non-judicial methods and by special methods such as Entry under process, Entry and publication, or possession and publication.
The laws governing New Hampshire foreclosures are found in Title 38 New Hampshire Revised Statutes, Chapter 479 (Mortgages of Realty). Judicial foreclosures are referenced in Chapter 479:1-24, and power of sale foreclosures are referenced in Chapter 479:25-30. New Hampshire primarily operates as a title theory state where the property title remains in trust until payment in full occurs for the underlying loan.
The typical process, depending on the method, is approximately 60-70 days long. Publication of the sale requires 24 days in New Hampshire. In a NH foreclosure there is no right of redemption and deficiency judgments are permitted.
In New Hampshire judicial foreclosure is similar to strict foreclosure in other New England states. A lender needs to file a complaint against a borrower and obtain a court ruling from the county court. If the court finds a borrower in default, it provides the borrower time to pay back the debt. If borrower does not pay within the allowable time frame, the court orders sale of the property.
Bank Owned, REO (Real Estate Owned), and foreclosure are terms commonly used to describe properties that are owned by a lender (financial institution; typically a bank), after an unsuccessful sale at a foreclosure auction. The lender will then resell the property by direct sale or market through a Realtor. Visit NH Foreclosures to view bank owned properties by town. Buyers often benefit by purchasing these properties as the lender’s interest is to dispose the asset quickly and aggressively price them to reflect market conditions.
Purchasing a home at a foreclosure auction has many risks to a potential buyer. There is commonly no opportunity to view the interior of the property and unless you are a skilled contractor your evaluation of the repairs needed may be substantially higher than your estimate. Septic systems, roofing, heating systems, plumbing and electrical may require substantial investment in order to repair for a resale. In some cases, there are individuals still occupying the premises and you may have to go through the eviction process and be denied access for period of time. Most buyers that purchase at auction will pay cash and either resell or mortgage the property after renovation. Condition and appraisal issues are barriers to financing prior to repairs. Because of these risks, real estate in New Hampshire is rarely sold at auction and the bank will instead take possession of the property. The property is then referred to as bank-owned, REO (real estate owned) or foreclosed property.
There are cases where a homeowner will attempt to sell their home before the bank starts the foreclosure process. The home owner is either already behind on their mortgage payments or will not be able to sell for a price that would cover the balance owed on their mortgage. This is referred to a short-sale and requires the lender’s approval. Obtaining approval can be a long and difficult process. In New Hampshire, after the Seller accepts the offer it will now be a contingency in the contract for lender approval. Until the lender accepts the contract, other contracts can be submitted which could essentially negate your accepted offer if the lender is so inclined. Additionally, there is no assurance that the lender will accept an offer at or above the listed price and they typically reject instead of countering which does not allow a “traditional” negotiation.
Banks want to sell foreclosed property quickly because they don’t want to tie up their money in capital reserves. Additionally, managing a foreclosed property is an expensive process and a “headache”. Some banks have experience in managing REOs and foreclosures and often have a department dedicated to them. Most lenders list their properties with local real estate agents who are experienced in marketing and managing these assets.
Banks do not like disclosure statements but understand that they must conform to federal and state laws. They will always state that they have no knowledge of the property and can make no representations as they have never occupied the property. Most banks may or may not provide incentive financing on their REOs but in most cases, this would apply only to property that was in very bad condition. Financial institutions usually sell such properties “as-is”; however buyers still have the opportunity to negotiate home inspections if they find “unknown material defects”.
If a buyer discovers issues that they did not anticipate, and which the institution will not repair, they can then cancel the transaction(given that the home inspection contingency was included as part of the offer to purchase contract). Institutions may agree to repairs but prefer to “discount” the property to a potential buyer and close quickly. Time is money to a lender. It is not in a buyer’s best interest to attempt to renegotiate a contract over trivial items that were disclosed or obvious prior to negotiation of the contract.
Generally, negotiating with a lender, in most cases, is an easier process than negotiating with a homeowner. Lenders are typically unemotional about the process and are interested in making a “good business” decision for their stockholders. Your best opportunity for obtaining a property at the lowest possible price is achieved through a quick, “clean” ( few contingencies) transaction with documentation of your qualifications.
A bank owned property isn’t always the best value for a consumer. It’s an old myth that “foreclosures” are a bargain. Always consult with industry professionals when considering pre-foreclosure and foreclosed real estate. Real estate agents, attorneys, home inspectors, independent lenders and accountants are advisors that will provide the necessary information to guide your through the process. New Hampshire real estate law provides the consumer with the option of representation of a “buyers agent” who will represent you in purchasing property. Their contract establishes a fiduciary responsibility to you and requires that they advise, council and negotiate on your behalf. Experienced real estate agents can guide you through all the options of evaluation and provide resources for vendors, zoning, permits and financing property.
The Virtual Homes real estate portal offers various search options to find foreclosed real estate. Direct New Hampshire and Massachusetts access with a map based search is available at NH, MA MLS. A “Foreclosure” search option is available in each town under “Popular Searches”.
As a consumer, you should educate yourself to the market and buy a propertybased on value, not because it is a distressed sale.
