Free Foreclosure Training and Leads - On This Thread - Ask Your Questions

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I am a very experienced foreclosure buyer and I think I can answer all of your questions. I can't get it all into one post, but ask your questions and we'll get to them. 

I started out doing pre-foreclosures back in the late 90's.  I learned the process step by step, making a lot of mistakes, and a lot of money along the way. I didn't know anyone else doing what I was doing, but there must have been others. And yes, there are tricks to the trade on this.

First some simple basics:

Deed of Trust - used mostly in the midwest and west coast. It's a "mortgage" document that allows the lender to take the property to sale without having to go to court to get a "court order" to sell. 

Mortgage - similar to a Deed of Trust but the lender has to sue to get approval by a judge to sell the property.

The steps go something like this: 

1. Borrower takes out a loan and starts making payments

2. Something happens and borrower starts missing payments.

3. Late notices go out and usually after the 3rd or 4th missed payment, a Notice of Default is sent.

4. A Notice of Default is basically to tell the borrower that the lender will start a foreclosure if the loan isn't brought current by a certain date.

5. I call this the "pre-foreclosure" stage. If the borrower brings the past payments current, life goes on as it was.

6. If the Default date passes, the lender has a Trustee who then prepares the foreclosure filings. The sequence and paperwork vary by state but follow the same general course.

7.  With a Deed of Trust, a sale date is set and the borrower has a set amount of days to bring the missed payments, late fees and legal fees current. 

8. With a Mortgage, a court date is set to be heard by a judge.

9. In either case, most lenders will allow a "reinstatement" if the borrower brings in the missed payments.

10. If the reinstatement date is missed, the property goes to "Auction" - that is what is commonly thought of as being "on the courthouse steps". In many cases it's at an attorney's office or at a public place designated by law.

11. If someone is the winning bidder at Auction, they pay the bid and receive a Deed in a sequence based on the state laws.

12. If no one bids on the property, the bank who also places a bid amount, usually of the amount owed, wins the bid. Banks don't like winning this kind of bid. It isn't in their charter to own property. It is a common misconception that the bank "takes back the house". The bank never owned the house. They simply lent money to someone who used the property as collateral.

13. Some states have situations in which there is a possibility of the borrower getting their house back, most do not.

14. If the house isn't vacated by the borrower, they have to be evicted.

15. The borrower's credit is trashed and it's hard for them to find a rental.

16. You can intervene between steps 4 and 10 and stop the foreclosure, help the credit of the borrower, give them some moving money, take over their loan (or pay it off) and make a fair amount of money.

Any questions?