Q. What is a foreclosure?
Ans. A situation in which a homeowner is unable to make principal and/or
interest payments on his or her mortgage, so the lender, be it a bank
or building society, can seize
and sell the property as stipulated in the terms of the mortgage
contract.
Q. How do I find foreclosures?
Ans. Find4close.com is the best site to find foreclosure lists, along with real estate agents who handle bank owned property, auctions are another great way to find foreclosures.
Q.
What are the two types of foreclosures?
Ans. The two types of foreclosures are;
Judicial foreclosure - a costly and time consuming foreclosure method by which the mortgaged property is sold through a court proceeeding requiring many standard legal steps such as filing of a complaint, service of process, notice and a hearing. Judicial foreclosure is availalble in all jurisdictions and is th eexclusive or most common method of foreclosure in at least 20 states.
Non-judicial Foreclosure- A foreclosure process by which, according to the mortgage instrument and a state statue, the mortgaged property is sold at a non-judicial public sale by a public official, the mortgagee, or a trustee without the stringent notice requirements, burdens,or delays of a judicial foreclosure. Power of the sale foreclosure is authorized and used then half the states
Q. How do I find out what my state laws are regarding foreclosures?
Ans.
See Foreclosure Laws
Q. What are the steps of foreclosure?
Ans.
1. Pre-foreclosure - this caused by the missed payments and the period of time before the Trustee's Sale/foreclosure auction.
2. Notice of Defaults - The notice of Defaults is the first legal step in the foreclosure process.The NOD is a publicly recorded document that details the Lender's claim thta the borrower has the defaulted on his /her agreement. It signifies that the bank is exercising its right, per the Deed of Trust, to sell or reclaim the property to recover the funds that were loaned to purchase the property. The time between the NOD and the Trustee Sale is still considered Pre- foreclosure
3. Foreclosure Sales/ Trustee Sale or Auction
In a judicial foreclosure sale a public sale is held at the courthouse after the lender has advertised the sale. This process can take about 3-12 months.
In a non - judical foreclosure sale, the trustee files the NOD and a notice of trustee's sale in both a newspaper and public records. The sale or auction is held in a public place such as a courthouse or title company If there are no bids the lender will credit bid the amount outstanding on the loan and take title to the property.
4. Redemption- This the right of the borrower to redeeem the property after the foreclosure sale. The borrower can get the property back by making up the delinquent payments and foreclosure fees including the remaining balance on the loan.
(read more...)
Q. What is the "Intent to Cure"?
Ans. In states that recognize cure periods, a form that is utilized "Intent to Cure" must be filed within the timeline required by the Public Trustee/County Courthouse by the homeowner. This forms allows the governing authority to request amounts and fees associated with the foreclosure from the lender which will be the accurate amount to catch up the loan and pull the property from foreclosure.
Q. What professionals would be important to have access to?
Ans.
1. A Real Estate Attorney
2. An Accountant
3. Several Qualified Real Estate Agents
4. Several Loan Brokers Direct Lenders and Hard Money and Private Money Lenders
5. A title Company or closing Attorney
6. A General Contractor or Remodeling Specialist
Q. What is a BPO and what is it used for?
Ans.The lender will initiate a BPO, a Broker Price Opinion. The lender will work with an appraiser or their listing agent to determine the property's value. Let your representive know that you will be the contact person for the BPO
Q. What should you say to the homeowner?
Ans. The most important connection is the first time you talk with the homeowner because it sets the tone for the conversations that follow. It is important to sound confident in your approach. Many investors will let the answering machine pick up because this will prepare them for the return call. The machine can provide this without the caller having to deal with a live person. When speaking with the homeowner take these steps;
1. Identify yourself and the reason for your call,
2. Let the homeowner do most of the talking,
3. Make sure you are speaking with the deeded homeowner,
4. Take notes,
5. Ask them if they are familiar with the foreclosure process and then explain the process to them.
6. Also, ask them "In a perfect world what you like to see happen?" (more then likely the will want to stay in the home),
7. Follow this with "In the event that you can not stay in your home do you have another plan?"
8. At this point, you want to make a connection with the homeowner and give them answers. Let them knowyou are there to help,
9. Finally, get the owner to rate their home. If you can get the loan balance lender, monthly amount of payments current interest rates loan number customer service number and other pertinent information, and get the most current payoff.
Q. How do you prepare to interview with the homeowner?
Ans. You need to collect the following;
1. Current Mortgage Information,
2. Additional information on other liens,
3. HOA information if applicable,
4. Appraisals or property evaluation,
5. and, a copy of the Notice of Default. ( if you are thinking this will work for a short sale please refer to Short Sale Package)
NOTE: If you have the home owner sign over the deed it must be notarized.
Q. How do you analyze the deal?
Ans.
1. Verify Loan balances, back payments, and fees that are associated with foreclosure for each loan or lien tied to the property.
2. Order a preliminary title search. This will provide you with the liens or judgements against the property.
3. Get the "Authorization to Release Form" signed. Once this form is in the lenders hands you will be able to discuss the account the lender.
4. Get the Buyers Purchase Opinion and estimate of repairs.
5. Prepare an exit stratgey (fix and flip wholesale short sale subject to lease option).
6. Use the last 6 months worth of comparibles to get an idea of what the after repair value is.
7. A good rule of thumb is 75 to 80 cents. For example if the top dollar is 100,000 you will take 80 percent off the value(80,000), then subtract your fix up costs (i.e. 5,000) and submit an offer of 75,000.
Q. What if the property is a HUD property?
Ans.HUD has set a rate of 82 cents on thier BPO appraised value Which means 99% of the time HUD will not discount below that value. Keep in mind that needs to take in accountant for additional expenses like realtor fees closing costs. It is always a good idea to make an offer you consider low you can always comein if they reject your offer.
Q. How do I tie up the property?
Ans. The most used method is geting the deed when they sign the deed get it notorized take it to the county clerks and recorder's office but only do this after the BPO is orderedand make sure you have done a throrough title searchbefore the deed is signed over to you. YOu can also tie up the contract by getting a Sales and Purchase Agreement
Q. How do I get financing?
Ans. Investing requires leveraging of money and credit. You can't operate without them. You can get around conventional lending requirements. One of the most common ways is to use hard money lenders or private money sources. You an also make "subject-to" purchases which use the homeowners credit and while you control the property via a wraparound or lease option The idea is to use OPM ( other people's money) OPC ( other people's credit)
Q. What are my exit strategies?
Ans. Lease options, "Subject To" purchases, Short Sales, Wholesaling, Fix and Flip, and Buy & Hold.
