I've always thought that it's a little tough thinking about how your kid will one day grow up into an adult and hopefully not live under your roof. But I guess something that's even harder to handle thinking about is that one day very soon they're going to start going to school. Well, I'm in that situation right now and I'm trying to deal with it in the best way that I can. It's tough though, but some of my friends who have older kids and have been there are really trying to help me out along the way.
I was online looking at an email exchange I was having my sister about it and reading through some parenting blogs. While I was doing that I ran across the site ClearTvBundle.com. After I looked through it a little bit I decided to change over our home Internet service to it.
I know that I shouldn't be making such a big deal out of the first day of kindergarten. As my sister reminded me, I'll also have the first day of college to look forward to, or not.
Foreclosure Process (Step-by-Step)
The Foreclosure Process - Step by Step Process -
Summary of Foreclosure Process:
The foreclosure process, a term often used today, is simply when a mortgage holder or a money lender decides to take legal action over the borrower, when the contract terms of the lending process are not met. (or failure of borrower to make payments their payments!)
Normally, in such agreements, the law agrees that when the borrower is failing with the payments, the lender is liable to take possession of the property, to avoid being at a loss with the deal and recoup the investment.
There are several legal procedures that are taken along this process but it essentially starts out with the signing of a promissory note. A promissory note completely gives the lender total security under the mortgage put upon a house or property. When the borrower fails to meet the stipulated payment terms, the respective loan ceases to generate profit for the lender or Mortgage Company. Since the cash flow is not running through that mortgage, the mortgage has entered a stage where it's considered a non performing process. At that point, the mortgage company can start a foreclosure process.
Lets take a look at the 4 stages in a Foreclosure Process!
Stage One - (Pre-Foreclosure)
At this stage, the foreclosure process has not been initiated yet. We are at a stage where the borrower fails a payment and the law now considers the individual as being at legal fault towards the lender. After two weeks of being late, the borrower is now considered "officially late" and a new process is initiated. At this stage, the lender company often calls the borrower or sends a late payment note and tries to understand whey he/she is late.
If the borrower continues to be at fault towards the lender for 45 days to 60 days, the mortgage company can send a "demand" notification. The borrower is then officially informed, viaegistered mail, that he is breaking the contract! The term Foreclosure is, for the first time, mentioned in the lender's communication. The borrower will be given information on how to stop the foreclosure process and is encouraged to communicate with the lender.
Around the 90th day, the mortgage company's lawyers have started to study the process and taking legal action, redirecting the lender's claim to state court or contacting the trustee.
There are two types of foreclosure processes that can be initiated. Judicial processes and non-judicial foreclosure processes.
Judicial Foreclosure:
Once there is clear intention from the lender to take legal action on the borrower at fault, the lender will then be required to show evidence to the court of law. The judicial foreclosure method is often used in States where the lien theory is predominant. In those cases, the lien property can be used to compensate the lender, when the borrower is at fault.
NON-Judicial Foreclosure:
The second type of foreclosure process is non-judicial. This process includes the use of a deed, rather than a mortgage to secure the contracts. In the trust deed, a third party trustee is often assigned to receive the deed in trust and to help the lender sell the borrower's property, if the borrower fails to meet the contract. Before the beginning of the actual foreclosure process, the borrower can always try to pay the debts and safe keep his home. If the borrower pays his debts, the lender can, at some points, not only terminate the official proceeds but also reinstate the loan.
Stage Two - (The Auction Sale)
When you reach the auction phase, the foreclosure process has been initiated. The pre phase is officially shut down and now begins the process of auctioning the borrower's property and tries to get back the money from the loan. The auction process takes place at the courthouse and the highest bidder takes the house. The homeowners' rights to the interest in the property are terminated by the auction sale, except in the so called redemption periods, which brings us to stage 3!
Stage Three - (Redemption Period)
How long this period lasts is dictated by state law. The new happy owner has now full access to ownership rights but his owning of the property is only technical because during a period of time, which is defined by law, the late borrowers can still have the last chance to redeem themselves on the late actions and try to gather the necessary amount of money to buy the house back from the new owners. In this Redemption period, the new owner is legally obliged to sell the house, if the late owner can reinstate the missing payments to the lender.
Not all states have redemption periods and it actually depends on heavily on if the states defends the lien or the title theory. In most pro-lien states the redemption period is instituted and in most title states, the redemption periods are not mandatory but are also an option. They range in duration from several days to over a year.
Stage Four - (Post-Foreclosure)
The final phase is called the Post- Foreclosure and at this stage, the property is irrevocably in the total ownership of the new owner or the mortgage institution, if it was not yet sold.
The redemption period has come to an end and the borrower was not successful in paying the total debt, so the property ownership was transferred to the lender. This property, is not causing any interest to the firm and is now part of the lot, and called a REO (real estate owned).
Those properties are obviously, most often listed on auction sales or with any real estate agent. It's not uncommon to go to a real estate agent and find bank owned homes listed on sale; the purchase process is equal to buying a 'regular' home. The process is simple and can be done with the help of your real estate agent. Look for a Short Sales Specialist in your state!
Summary of Foreclosure Process:
The foreclosure process, a term often used today, is simply when a mortgage holder or a money lender decides to take legal action over the borrower, when the contract terms of the lending process are not met. (or failure of borrower to make payments their payments!)
Normally, in such agreements, the law agrees that when the borrower is failing with the payments, the lender is liable to take possession of the property, to avoid being at a loss with the deal and recoup the investment.
There are several legal procedures that are taken along this process but it essentially starts out with the signing of a promissory note. A promissory note completely gives the lender total security under the mortgage put upon a house or property. When the borrower fails to meet the stipulated payment terms, the respective loan ceases to generate profit for the lender or Mortgage Company. Since the cash flow is not running through that mortgage, the mortgage has entered a stage where it's considered a non performing process. At that point, the mortgage company can start a foreclosure process.
Lets take a look at the 4 stages in a Foreclosure Process!
Stage One - (Pre-Foreclosure)
At this stage, the foreclosure process has not been initiated yet. We are at a stage where the borrower fails a payment and the law now considers the individual as being at legal fault towards the lender. After two weeks of being late, the borrower is now considered "officially late" and a new process is initiated. At this stage, the lender company often calls the borrower or sends a late payment note and tries to understand whey he/she is late.
If the borrower continues to be at fault towards the lender for 45 days to 60 days, the mortgage company can send a "demand" notification. The borrower is then officially informed, viaegistered mail, that he is breaking the contract! The term Foreclosure is, for the first time, mentioned in the lender's communication. The borrower will be given information on how to stop the foreclosure process and is encouraged to communicate with the lender.
Around the 90th day, the mortgage company's lawyers have started to study the process and taking legal action, redirecting the lender's claim to state court or contacting the trustee.
There are two types of foreclosure processes that can be initiated. Judicial processes and non-judicial foreclosure processes.
Judicial Foreclosure:
Once there is clear intention from the lender to take legal action on the borrower at fault, the lender will then be required to show evidence to the court of law. The judicial foreclosure method is often used in States where the lien theory is predominant. In those cases, the lien property can be used to compensate the lender, when the borrower is at fault.
NON-Judicial Foreclosure:
The second type of foreclosure process is non-judicial. This process includes the use of a deed, rather than a mortgage to secure the contracts. In the trust deed, a third party trustee is often assigned to receive the deed in trust and to help the lender sell the borrower's property, if the borrower fails to meet the contract. Before the beginning of the actual foreclosure process, the borrower can always try to pay the debts and safe keep his home. If the borrower pays his debts, the lender can, at some points, not only terminate the official proceeds but also reinstate the loan.
Stage Two - (The Auction Sale)
When you reach the auction phase, the foreclosure process has been initiated. The pre phase is officially shut down and now begins the process of auctioning the borrower's property and tries to get back the money from the loan. The auction process takes place at the courthouse and the highest bidder takes the house. The homeowners' rights to the interest in the property are terminated by the auction sale, except in the so called redemption periods, which brings us to stage 3!
Stage Three - (Redemption Period)
How long this period lasts is dictated by state law. The new happy owner has now full access to ownership rights but his owning of the property is only technical because during a period of time, which is defined by law, the late borrowers can still have the last chance to redeem themselves on the late actions and try to gather the necessary amount of money to buy the house back from the new owners. In this Redemption period, the new owner is legally obliged to sell the house, if the late owner can reinstate the missing payments to the lender.
Not all states have redemption periods and it actually depends on heavily on if the states defends the lien or the title theory. In most pro-lien states the redemption period is instituted and in most title states, the redemption periods are not mandatory but are also an option. They range in duration from several days to over a year.
Stage Four - (Post-Foreclosure)
The final phase is called the Post- Foreclosure and at this stage, the property is irrevocably in the total ownership of the new owner or the mortgage institution, if it was not yet sold.
The redemption period has come to an end and the borrower was not successful in paying the total debt, so the property ownership was transferred to the lender. This property, is not causing any interest to the firm and is now part of the lot, and called a REO (real estate owned).
Those properties are obviously, most often listed on auction sales or with any real estate agent. It's not uncommon to go to a real estate agent and find bank owned homes listed on sale; the purchase process is equal to buying a 'regular' home. The process is simple and can be done with the help of your real estate agent. Look for a Short Sales Specialist in your state!
Obtain Free Foreclosure Listings
Obtaining Free Foreclosure Listings - Key To Generating Profits In Foreclosures!
Don’t pay for foreclosure listings! It’s that simple. Trust me there are a number of ways to obtain free foreclosure listings but here is something you NEVER want to do.NEVER call the agent named on a sign in the yard of a house you want to buy. This is important in any home purchase but especially important in learning how to buy foreclosures.
Remember, the agent on the sign works for the Seller (bank) and protects the Seller’s best interests, not yours.
Find a local real estate agent who will agree to work for you as a buyer’s agent. We’ll be going into more depth in future articles about how to find the right agent but suffice it to say, you need someone who is working for you.
After all could you imagine a divorce attorney representing both husband and wife? Of course not. So make sure you have your own representation that can help you navigate the labyrinth of problems that may arise in the purchase of foreclosure.
Now once you have secured your own buyer’s agent, he or she will feed you all of the listings that you need for free. There are also some good sources of free foreclosure listings. You should check them out and see if they work for you.
Interest in Buying Foreclosures?
Interest in Buying Foreclosures
Buying foreclosures is one way people have found to get rich quick in a bad economy. This is one of the few well known ways to get out of the wage slave mindset and become an entrepreneur. The richest people see jobs as being only a means to an end so they can go onto running their own business or to a profitable hobby like investing in real estate. Many people have become very rich in just two years by brokering houses in foreclosures to people who want to fix them up and flip them.
Buying foreclosures can also be as simple as putting an ad in the paper. You can spend hours and hours searching on the internet or through newspapers looking for cheap properties to sell or you can benefit from the shortcuts and recommendations suggested online that help you find properties for cheap. You will learn how to put ads in the paper that state, “I buy houses for cash” and find people who are willing to sell for pennies on the dollar.
Once you find someone to do the deal with you, simply assign the sales contract to him or her and this person will close on the transaction in your place. You’ll get paid an assignment fee for putting the deal together. The closing will take place at a title company or an attorney’s office. The rehabber can arrange the entire closing. All you have to do is show up and collect your check.
Making money in real estate is not rocket science. However it is also not as simple as just “fixing and flipping it.” Sometimes you don’t even have to fix it before you resell it. The key to making money buying foreclosures is to be able to sell it again and not being stuck with a dud that in the end costs you more than you paid for it.
Buying foreclosures is one way people have found to get rich quick in a bad economy. This is one of the few well known ways to get out of the wage slave mindset and become an entrepreneur. The richest people see jobs as being only a means to an end so they can go onto running their own business or to a profitable hobby like investing in real estate. Many people have become very rich in just two years by brokering houses in foreclosures to people who want to fix them up and flip them.
Buying foreclosures can also be as simple as putting an ad in the paper. You can spend hours and hours searching on the internet or through newspapers looking for cheap properties to sell or you can benefit from the shortcuts and recommendations suggested online that help you find properties for cheap. You will learn how to put ads in the paper that state, “I buy houses for cash” and find people who are willing to sell for pennies on the dollar.
Once you find someone to do the deal with you, simply assign the sales contract to him or her and this person will close on the transaction in your place. You’ll get paid an assignment fee for putting the deal together. The closing will take place at a title company or an attorney’s office. The rehabber can arrange the entire closing. All you have to do is show up and collect your check.
Making money in real estate is not rocket science. However it is also not as simple as just “fixing and flipping it.” Sometimes you don’t even have to fix it before you resell it. The key to making money buying foreclosures is to be able to sell it again and not being stuck with a dud that in the end costs you more than you paid for it.
How to Find Foreclosures - How to start?
How to Find Foreclosures
Many homeowners who gorged on debt during the real estate boom a few years ago are now starting to feel the squeeze. They’re struggling to keep up with their ballooning payments or, worse, losing their homes to creditors.
As the number of foreclosed properties continue to rise, new opportunities await for others. These are fast becoming ideal market conditions for a niche group of real estate investors called foreclosure gurus. They can deliver homeowners fast cash in return for their property which is inevitably sold at a nice discount. These type of foreclosure gurus used to post ads in the newspaper or staple ads to telephone poles but now there are several websites that make finding forclosures much easier.
Here are some beginner tips for those of you wondering where to start in the foreclosure market:
Many homeowners who gorged on debt during the real estate boom a few years ago are now starting to feel the squeeze. They’re struggling to keep up with their ballooning payments or, worse, losing their homes to creditors.
As the number of foreclosed properties continue to rise, new opportunities await for others. These are fast becoming ideal market conditions for a niche group of real estate investors called foreclosure gurus. They can deliver homeowners fast cash in return for their property which is inevitably sold at a nice discount. These type of foreclosure gurus used to post ads in the newspaper or staple ads to telephone poles but now there are several websites that make finding forclosures much easier.
Here are some beginner tips for those of you wondering where to start in the foreclosure market:
- Check out a couple of the new online services like propertyshark.com and foreclosures.com (aff). These foreclosure listing sites provide the latest foreclosures in your area and often include the amount owed and the estimated value. The amount of time you save by using these sites versus having to find foreclosures the old-fashioned way is well worth the expense if you’re serious. Both of these websites provide a free trial so you can test the site out before you commit to their paid service.
- Don’t even bother attending public foreclosure auctions unless you’re a pro. Despite what you may read in foreclosure books, typically these auctions are controlled by banks and other big lenders so the chances of you actually nabbing a foreclosed property are pretty slim. Instead, use an online service like the ones I mentioned above to find a property right after it goes into default. During that time there is a brief window to negotiate directly with the property owner which is your chance to get the property before it even hits a public foreclosure auction.
- After spotting a property online right after it goes into default, you’ll want to get in touch with the property owner or their lawyer. Your goal here is to ask the owner if there is any way to negotiate a purchase of their property before it goes into auction. Most of the time especially if you speak with the attorney, the answer is going to be a firm no. If that’s the case, it’s best to go down to the property and find the owner directly. The lawyer is less likely to cooperate because there’s usually no additional benefits for them to work out a deal before it goes into foreclosure.
- If the owner is willing to work out a deal then you’re in good shape and it’s time to negotiate a price and terms. If not, you might have to get creative and see if the owner is willing to become your partner. What you can do is promise to solve the owner’s immediate problem by paying enough mortgage-backed payments to get the loan out of default. In order for this to work you have to exchange for the deed to the property and potentially provide the owner with a temporary apartment if you need to refurbish their home. Then once you sell the house, you give the owner a check for a portion of the profit which typically ranges between 10 to 20%. If neither one of those strategies work, it’s probably best to move on to another foreclosed property.
How Foreclosure Works
How Foreclosure works
The foreclosure process is not very difficult to understand. There are several stages during which the homeowner has an opportunity to bring the loan current and avoid foreclosure.
After about three to six months of missed payments, the lender orders a trustee to record a Notice of Default (NOD). At the County Recorder's Office. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.
If the default isn't corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder's Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.
The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trustee’s deed to the property.
If this occurs, and the opening bid is not met, the property is deemed a REO or Real Estate Owned. This typically occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender.
When you purchase property at a foreclosure sale, all junior liens other than are wiped out. Priority of liens is determined by the date of recording. When you purchase a REO aka. Bank REO, you will typically receive the property with a clean title.
Foreclosure Auction
At auction, an opening bid on the property is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale, for the lender.
If this occurs, and the opening bid is not met, the property is deemed a REO or Real Estate Owned. This typically occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender.
When you purchase property at a foreclosure sale, all junior liens other than are wiped out. Priority of liens is determined by the date of recording. When you purchase a REO aka. Bank REO, you will typically receive the property with a clean title.
Definition of Foreclosure
Foreclosure Defined
A foreclosure occurs when a property owner cannot make principal and/or interest payments on his/her loan, typically leading to the property being seized and sold.
How to buy a foreclosed home
Buying a foreclosed home can present both great rewards and certain risks. We recommend you do your homework and research before you buy. Speaking to a real estate or a short sale specialist may also be a good route for advice! Below are some tips and steps to Buying and how to by a foreclosed home!
INVESTING IN FORECLOSURES
The mortgage foreclosure process creates three sets of real estate investing opportunities: the "Default/Pre-Foreclosure" phase, the "Auction/Sale" phase and the "REO" phase. It is important to be knowledgeable about the risks and the rewards of each opportunity.
BUYING PRE-FORECLOSURES
Buying pre-foreclosures involves working directly with the home-owner and sometimes the lender. Your goal is to create a Win-Win scenario. One win is for the homeowners as they make a sale and one win is for yourself when you buy the property at a substantial discount.
To accomplish a successful purchase, most experts recommend the following:
Cons: It is sometimes difficult to contact the property owner. You will usually have a good amount of competition. You may need to negotiate with the lien holders.
Finally, the court house research can be cumbersome if you decided to personally look up every single newly filed foreclosure or attempt to locate upcoming sales. You can opt to subscribe to our weekly pre-foreclosure report and let us do all the research at the courthouse. You will be freed up to spend your valuable time focusing on the properties you are most interested in. A title search is strongly recommended and that research would require your attention.
Cons: Auctions are frequently postponed, wasting your time and effort. It is sometimes impossible to inspect the property. Title Searches are strongly recommended and can cost you some additional money. Certified checks for a percentage of the purchase amount may be required with the balance due in weeks, days or even hours. Improper research can lead to devastating results. Be informed. Call the auction ahead of time.
Pros: The lender is usually the senior lien holder, thereby wiping out all other liens at the auction. This means an REO will always have clear title, which saves a lot of time, expense and worries when buying foreclosures. Most likely, the lender will also have paid any property taxes in arrears. The lender may either repair the property to acceptable standards or allow a discount to the buyer to accomplish the repairs.
Cons: Rewards follow risk. This is a low risk investing method and the rewards can be on the low side as well. Average savings may range from only 5% to 15% off market value, although discounts of 25% or more are possible if you know how.
Step two. When you get closer to buying, verify that the property is still in foreclosure.
Step three. Determine the property's fair market value (after fix-up) from local comparable sales.
Step four. Make a choice. How to analyze the property for buying from the owner before the sale or at the foreclosure sale:
To buy from the owner-in-default subtract all liens and the unpaid property taxes from the fair market value. That will give you the owner's gross equity. From it subtract all sums necessary to rehab, to reinstate the delinquent payments, the resale costs (commissions, transactional expenses and buyers points) and foreclosure fees. This will give you the owner’s NET equity.
Step five. To buy the property at the foreclosure auction you would ignore all liens that were recorded junior in time to the one going to sale. Then subtract the opening bid of the lien going to sale and any senior liens (including prop. taxes) from the fair market value of the property to determine the amount of equity up for grabs at the sale and determine your maximum bid amount.
INVESTING IN FORECLOSURES
The mortgage foreclosure process creates three sets of real estate investing opportunities: the "Default/Pre-Foreclosure" phase, the "Auction/Sale" phase and the "REO" phase. It is important to be knowledgeable about the risks and the rewards of each opportunity.
BUYING PRE-FORECLOSURES
Buying pre-foreclosures involves working directly with the home-owner and sometimes the lender. Your goal is to create a Win-Win scenario. One win is for the homeowners as they make a sale and one win is for yourself when you buy the property at a substantial discount.
To accomplish a successful purchase, most experts recommend the following:
- (1) evaluate and narrow selections to pursue.
- (2) locate loans in default, you can begin this with our weekly pre-foreclosure report and when a property seriously interests you then we recommend that you do a title search
- (3) inspect the property if at all possible
- (4) evaluate the home owner's needs
- (5) determine the market value of the property, fix-up costs, potential sales price and profits
- (7) arrange default work out by negotiating with the owner and the lender
- (8) close on the property, repair and resell it quickly.
Cons: It is sometimes difficult to contact the property owner. You will usually have a good amount of competition. You may need to negotiate with the lien holders.
Finally, the court house research can be cumbersome if you decided to personally look up every single newly filed foreclosure or attempt to locate upcoming sales. You can opt to subscribe to our weekly pre-foreclosure report and let us do all the research at the courthouse. You will be freed up to spend your valuable time focusing on the properties you are most interested in. A title search is strongly recommended and that research would require your attention.
BUYING AT AN AUCTION
Buying on the court house steps at the auction can be the most rewarding way to buy properties and the most dangerous at the same time. The property is publicly auctioned off to the highest bidder, and the process moves quickly. When bidding at the auction, you compete against the lender and other investors.
Auction buyers:
- (1) research properties prior to the sale date,
- (2) pursue realistic opportunities,
- (3) calculate values and potential profits,
- (4) determine bid price and
- (6) follow the property to the auction and participate.
Cons: Auctions are frequently postponed, wasting your time and effort. It is sometimes impossible to inspect the property. Title Searches are strongly recommended and can cost you some additional money. Certified checks for a percentage of the purchase amount may be required with the balance due in weeks, days or even hours. Improper research can lead to devastating results. Be informed. Call the auction ahead of time.
BUYING REO'S
Perhaps the easiest way to buy foreclosed property is buying REOs ("real estate owned"). An REO occurs when the lender takes back the property to gain possession and cut its losses. The lender, however, does not want the property because it is not in the real estate business and is therefore usually motivated to move the property quickly. Pros: The lender is usually the senior lien holder, thereby wiping out all other liens at the auction. This means an REO will always have clear title, which saves a lot of time, expense and worries when buying foreclosures. Most likely, the lender will also have paid any property taxes in arrears. The lender may either repair the property to acceptable standards or allow a discount to the buyer to accomplish the repairs.
Cons: Rewards follow risk. This is a low risk investing method and the rewards can be on the low side as well. Average savings may range from only 5% to 15% off market value, although discounts of 25% or more are possible if you know how.
STEPS IN BUYING A FORECLOSURE
Step one. Get the newly filed foreclosure information early so you can plan.Step two. When you get closer to buying, verify that the property is still in foreclosure.
Step three. Determine the property's fair market value (after fix-up) from local comparable sales.
Step four. Make a choice. How to analyze the property for buying from the owner before the sale or at the foreclosure sale:
To buy from the owner-in-default subtract all liens and the unpaid property taxes from the fair market value. That will give you the owner's gross equity. From it subtract all sums necessary to rehab, to reinstate the delinquent payments, the resale costs (commissions, transactional expenses and buyers points) and foreclosure fees. This will give you the owner’s NET equity.
Step five. To buy the property at the foreclosure auction you would ignore all liens that were recorded junior in time to the one going to sale. Then subtract the opening bid of the lien going to sale and any senior liens (including prop. taxes) from the fair market value of the property to determine the amount of equity up for grabs at the sale and determine your maximum bid amount.
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