Cost involved in the event of a foreclosure
Foreclosure costs can vary depending on a number of factors including but not limited to the following: jurisdiction, a judicial vs. non-judicial foreclosure process, borrower behavior, the size and value of loan or property, etc.
In a standard uncontested foreclosure located in a non-judicial state, we estimates that foreclosure costs consist of between 3-7% of the loan balance. These represent out-of-pocket legal and administrative costs and fees required to conduct a foreclosure. These figures do not include potential protective advances related to past due property taxes, property insurance, property management fees, and disposition costs, if any.
Foreclosure costs are likely to increase in judicial foreclosure states and in cases where there is a bankruptcy filing.
Most Crowdfunding companies treat a late payment or default this way; Default interest: In the event of payment or maturity default, the borrower may be required to pay default interest until the loan is brought current or gets paid in full. In those cases, they split default interest and will distribute 50% of the proceeds collected to investors on a pro rata basis once it’s collected.
Extension fees (including forbearance fees): There are a couple types of extension options. There are those that are negotiated at origination (i.e. borrower extension options) and those that are granted on a situation-by-situation basis after the initial maturity date. For pre-negotiated extensions, there can either be an agreed upon fee associated with the option or it may be given at no fee. The situational extensions are typically granted on, or after, maturity and the borrower will be charged a fee in exchange for being granted that option. In any case, where the Crowdfunding company collects extension fees, 50% of those proceeds will be distributed to investors on a pro rata basis once we’ve received them.
Foreclosure costs can vary depending on a number of factors including but not limited to the following: jurisdiction, a judicial vs. non-judicial foreclosure process, borrower behavior, the size and value of loan or property, etc.
In a standard uncontested foreclosure located in a non-judicial state, we estimates that foreclosure costs consist of between 3-7% of the loan balance. These represent out-of-pocket legal and administrative costs and fees required to conduct a foreclosure. These figures do not include potential protective advances related to past due property taxes, property insurance, property management fees, and disposition costs, if any.
Foreclosure costs are likely to increase in judicial foreclosure states and in cases where there is a bankruptcy filing.
Most Crowdfunding companies treat a late payment or default this way; Default interest: In the event of payment or maturity default, the borrower may be required to pay default interest until the loan is brought current or gets paid in full. In those cases, they split default interest and will distribute 50% of the proceeds collected to investors on a pro rata basis once it’s collected.
Extension fees (including forbearance fees): There are a couple types of extension options. There are those that are negotiated at origination (i.e. borrower extension options) and those that are granted on a situation-by-situation basis after the initial maturity date. For pre-negotiated extensions, there can either be an agreed upon fee associated with the option or it may be given at no fee. The situational extensions are typically granted on, or after, maturity and the borrower will be charged a fee in exchange for being granted that option. In any case, where the Crowdfunding company collects extension fees, 50% of those proceeds will be distributed to investors on a pro rata basis once we’ve received them.
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