Foreclosure is a legal process where a lender takes an action to sell a property of a defaulted borrower to satisfy a debt secured by that property. A default in payment of the mortgage or what is known as a deed of trust in most states such as California most often initiates the foreclosure proceeding.

Today's housing market is presenting investors with unprecedented opportunities to purchase foreclosures. New records are set every month for the number of foreclosed homes and the percent increase over previous years in the United States. Foreclosure investing is a strategy that is often used for a quick flip or a long term hold. Flipping houses is where you buy a foreclosure home, quickly fix it up and then resell it at a profit. A long term hold strategy is buying a distressed property at a below market rate and holding it until it has appreciated to the point where you want to sell it.

People usually don't buy foreclosed homes to live in, but this may be a good option for you. With real estate at an all time high in many US markets buyers are looking for other methods to purchase a home. Armed with the right information, a great way to buy is through a foreclosure auction.

Benefits of Foreclosure Investing

  • You can purchase a short sale home at any time during the foreclosure process
  • Learn to recognize the signs of motivated sellers and save thousands
  • Foreclosures can sell for far less than their market value
  • You can help a distressed homeowner facing bad credit or bankruptcy

Foreclosure - The Basics

There are three phases of the foreclosure process, pre foreclosure, foreclosure, and Real Estate Owned or REO. Pre-foreclosure occurs after the lender issues a Notice of Default to the borrower or initiates a lis pendens proceeding. The foreclosure auction is the next phase and involves offering the property for sale to the public on a set time and date. REO happens when a home fails to sell at at auction and ownership reverts to the lender. There are 3 main types of organizations involved in foreclosures, mortgagors, banks, and government agencies. Mortgage foreclosure involves lenders such as Countrywide and LendingTree. Bank foreclosures involve Bank of America, Wells Fargo, and other financial institutions. Government foreclosures are done by HUD, VA, and quasi-governmental bodies like Fannie Mae and Freddie Mac.

Foreclosure Listings are What Most Are Looking For

Most folks are looking for current foreclosure listings in their area. Two top websites that list foreclosure homes are RealtyTrac and Foreclosure.com. Foreclosed home listings used to be available only from the county assessor or recorders office and required a personal visit to look them up.

Stop Foreclosure if You Are a Homeowner in Need of Help

If you are a distressed homeowner you may be looking for ways to stop a foreclosure proceeding today.
States like New York that use a mortgage require the lender to go through the courts which can take up to a year. 34 other states such as California use a deed of trust which involves a third party known as a trustee that hold the note. The trustee is not required to go through the court so foreclosures in these states can occur at a greatly accelerated pace.

There are many opportunities to buy foreclosed homes today. You can make a short sale at any of the three phases of the foreclosure process. Foreclosure listings are available from many sources online. There are methods to stop a foreclosure from proceeding or prevent one from happening to you in the first place. If you are an investor read on to learn all about purchasing distressed properties. If you are a homeowner in danger of default or foreclosure now is the time to take action to save your house.

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