What are first steps in pursuing a pre-foreclosure?

Question

Dear Forum Reader,

I learned about a home being foreclosed on soon.  It will be listed by the bank late this month.  My interest in the home at this time is for a potential wholesale deal.  If I get a verbal from the owner on how much is owed and any liens against the home, how can I confirm these things?

Micah Harris · Answer

Go to your county clerks office or call them or if the county you're in has a website to look it up on, even better. Look up the owner name for the deed, mortgage and anything else. It might say 'All instrument types' so you get a list of everything under their name. It should say 'Liens' if there are any liens. REL means released. Lis Pendens means they are in pre-foreclosure. Here is a link to finding interest rates. The year you want is on top, use the chart on the far left and add 3 to whatever the interest rate is for the month you want.

http://mortgage-x.com/general/national_monthly_average.asp?y=2003

Next is the mortgage calculator. Just put the info in and it tells the monthly payment and how much is still owed after however many years.

http://1728.org/mortpmts.htm

http://mortgage-x.com/general/national_monthly_average.asp?y=2003

Next is the mortgage calculator. Just put the info in and it tells the monthly payment and how much is still owed after however many years.

http://1728.org/mortpmts.htm

Dave Largent · Answer

Thank you for your responses.  The work would be a mix of my labor and pros.  The A/C, furnace, water heater, pressed board flooring (whole house was this material), and possibly roof were needing replacement.  I spoke with the homeowner and shortly after with the bank.  The homeowner was ready to be on her way and had little interest in the home.  She also had no equity.  I was hoping to find something about this home that made it a winner, but I didn't see it at more than $120k.  Even that, as Doug Woodville suggested, may have been too much.

Doug Woodville · Answer

@Dave Largent - $20k-$30k seems like a large swing with this priced house. I'm not sure if you were thinking of performing the work and what your lending situation is (maybe you had cash?) but I feel like a purchase price of $120k might be cutting it too close.

Did you talk to the homeowner when you found out about it? Or did you just go to the bank?

Stanley Parsley · Answer

dave

when you hear of a foreclosure there is only so much you can do-wait

you can contact the clerk then try to find the banking institution but usually depending on the state there are a plethora of rules to the game

in some states it could take up to 190 days before the lein process is filed and the property goes to auction, in other states it could slate to a short sale, this is were you have to be ready to sweep it up

first thing to do when you hear of one is run the comps and the debt it has incurred, the property may go to auction three or four times before it is in the ball park to make it a good deal

enjoy

Jim Dandy · Answer

I wouldn't wait for banks to file first especially in Georgia.  I would call them out as to why they sent a notice and demands requesting the owner to contact them

Have the homeowmer request a assistance or at least know options in cof  such as lowering payments, forebearrance , modify the loan etc....

if lender don't want to discuss and tell you t4he same thing, then they want to wait for the FC notice again? Then they trying to trick you to Foreclosure notice  at which point they ask for the entire loan amount to be paid back within 4 weeks.

So tell the owners to sign paperwork with you now and pay the late paymentï344.

Dave Largent · Answer

Thank you for the information.  In my case, I was notified by a family member that the home was going into foreclosure before it was made public.  I'd hoped that would.give me an edge in viewing and negotiating.  However, the bank wouldn't discuss it.  I was told to wait until the foreclosure notice was made.  Was there more I could have done to take charge and benefit from being made aware early of the foreclosure?

Don Wede · Answer

Pre-foreclosure can be a touchy area to deal in.  Florida has some very strict laws.  Illinois not so much.  The first time the general public is notified that a foreclosure action has been started by the lender is when they file at the county clerk’s office a lis pendens case.  This is done in  the state and county the property is located in.

So in essence it is hard to actually truly get in touch with people in pre-foreclosure.  If you have a very powerful website for motivated sellers, hopefully they reach out to you for help.  If they do reach out for financial assistance an investor may decide to get involve.  The  property would need sufficient equity and a favorable 30 year fixed rate note.  An investor may decide to bring their note current for the right at some time in the future to buy the home from the owners at pre agreed price.  This is called giving an option to buy.  Of course if there is sufficient equity an investor may make a flat out all cash offer to buy.  Now lastly if the homeowner just would want to walk away from the situation and investor may catch the loan up and take over the payments this is called (buying subject to the mortgage).

What are first steps in pursuing a pre-foreclosure?

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