Building Wealth by Investing in Foreclosure Houses
As a Realtor, it’s amazing to me what lengths people are going to in order to buy a house! Many of these people are dealing with “predatory lenders”, who prey on people with bad credit, including past foreclosures, and write home loans for people who really can’t afford them. While I was describing one person who stood out in my memory as someone who bought a home that she couldn’t afford to an attorney friend of mine who specializes in Bankruptcy and Foreclosure help told me “In five years, she will be MY client.” My response was “Alan, not FIVE years - ONE year!”
Foreclosure is a process, highly regulated by state law, in which the lender tries to recoup the amount owed on a defaulted loan by either selling or taking ownership of the property. The foreclosure process begins when a borrower/owner doesn’t make their mortgage payments, and the lender files a public default notice. The foreclosure process can end one of four ways:
1. The borrower/owner pays off the default amount to reinstate the loan during a grace period determined by state laws. This grace period is also known as pre-foreclosure, and can be as much as six months. The mortgage loan is reinstated, as if nothing ever happened. Happy ending for the homeowner!
2. The borrower/owner sells the property to a third party, either before or during pre-foreclosure. The sale allows the borrower/owner to pay off the loan. This is not as happy an ending for the homeowner, but avoids the consequence of having a foreclosure on the homeowner’s credit history. A smart homeowner who realizes that making the payments is becoming problematic will choose this course of action before things progress to the next level.
3. If the homeowner cannot catch the payment up to make them current and either cannot or will not sell the home, the lender will usually schedule an auction. A third party may buy the property at a public auction at the end of pre-foreclosure.
4. If the auction does not bring about a sale of the property, the lender will take ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at thAs a Realtor, it’s amazing to me what lengths people are going to in order to buy a house! Many of these people are dealing with “predatory lenders”, who prey on people with bad credit, including past foreclosures, and write home loans for people who really can’t afford them. While I was describing one person who stood out in my memory as someone who bought a home that she couldn’t afford to an attorney friend of mine who specializes in Bankruptcy and Foreclosure help told me “In five years, she will be MY client.” My response was “Alan, not FIVE years - ONE year!”
Foreclosure is a process, highly regulated by state law, in which the lender tries to recoup the amount owed on a defaulted loan by either selling or taking ownership of the property. The foreclosure process begins when a borrower/owner doesn’t make their mortgage payments, and the lender files a public default notice. The foreclosure process can end one of four ways:
1. The borrower/owner pays off the default amount to reinstate the loan during a grace period determined by state laws. This grace period is also known as pre-foreclosure, and can be as much as six months. The mortgage loan is reinstated, as if nothing ever happened. Happy ending for the homeowner!
2. The borrower/owner sells the property to a third party, either before or during pre-foreclosure. The sale allows the borrower/owner to pay off the loan. This is not as happy an ending for the homeowner, but avoids the consequence of having a foreclosure on the homeowner’s credit history. A smart homeowner who realizes that making the payments is becoming problematic will choose this course of action before things progress to the next level.
3. If the homeowner cannot catch the payment up to make them current and either cannot or will not sell the home, the lender will usually schedule an auction. A third party may buy the property at a public auction at the end of pre-foreclosure.
4. If the auction does not bring about a sale of the property, the lender will take ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at th
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