Foreclosure FAQs
Answers to all of your frequently asked foreclosure questions
- What is a foreclosure?
- How do lenders foreclose on properties?
- What are the stages of foreclosure?
- Who can buy a foreclosure?
- Can I buy a foreclosure as an Investment?
- Can I make money or save money by purchasing Foreclosure properties?
- How can I find out which foreclosure properties are for sale?
- How do I get more information about the foreclosure properties that are for sale?
- How do I buy foreclosed property?
- Do I need a real estate agent to buy a foreclosure property?
- What is a pre-foreclosure?
- How can I purchase a pre-foreclosure?
- What is a foreclosure auction?
- How do I find foreclosure auctions?
- What should I do before attending a foreclosure auction?
- Will I be able to inspect the property before the auction?
- How is the opening bid at a foreclosure auction determined?
- What are the bidding procedures?
- How much money do I need to bring to the foreclosure auction?
- What is an REO?
- How do banks sell REOs?
- How do I find REO properties?
- How can I purchase REO properties?
- Do I need a real estate agent?
- Should I get pre-approved for a mortgage before buying an REO?
- What type of lender should I look for?
- Do government agencies sell foreclosed homes?
- What is a HUD foreclosed home?
- How do I purchase a HUD foreclosed home?
- What is a VA foreclosed home?
- What are Fannie Mae homes?
What is a foreclosure?
A foreclosure is a legal process in which a bank or other secured creditor sells or repossesses a piece of real property because the owner has failed to make payments on their mortgage.
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How do lenders foreclose on properties?
Every State has different laws regarding the foreclosure process. Learn more about foreclosure laws in your state by going to the State foreclosure laws at ForeclosedHomes.com. Depending on the States Foreclosure Laws a foreclosure starts after a homeowner fails to make their loan payments for around 90 days and a lender records a notice of default with the county courthouse or files a lawsuit against the property owner.
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What are the stages of foreclosure?
- Pre-foreclosure - begins when a borrower becomes delinquent. It is the period of time between when a lender publicly files a foreclosure notice of default or lis pendens and ends at a sheriff or trustee auction sale. It is during this period of time that the property owner has a chance to settle their mortgage debt or sell the property. If the property is sold during this stage the owner can avoid having a defaulted loan on their credit history.
- Foreclosure Auction Sale - represents the ending of the pre-foreclosure phase. Foreclosed properties are sold at public auction to the highest bidder. Depending on Foreclosure law auction sales are generally held at the county courthouse or a trustee’s office. The opening bid at an auction sale is based on the total amount owed to the foreclosing lender, interest incurred, late charges, penalties, outstanding liens, and fees incurred because of the foreclosure proceedings. In most states properties purchased at auction generally have to be paid with cash or a cashiers check on the day of the auction. In some states bidders are required to bring a percentage of the bid amount to the auction and pay the rest within 30 to 90 days.
- Real Estate Owned Property (REO) - begins after auction. If the property fails to sell or the lender buys the property at auction ownership rights of the property are transferred to the lender. In this phase properties are listed for sale through a network of real estate agents who help the lender dispose of the properties on the open market. Purchasing an REO can be as simple as working through an agent who will write up an offer and present it to the lender.
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Who can buy a foreclosure?
Anyone! If you have the cash or can qualify for a mortgage, you can buy a foreclosure property.
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Can I buy a foreclosure as an Investment?
Yes! Foreclosure properties listed on ForeclosedHomes.com are available to all buyers, including investors.
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Can I make money or save money by purchasing Foreclosure properties?
If you are interested in buying a home foreclosure properties offer you the chance to purchase properties that may have been otherwise priced out of reach. Investors can often buy foreclosures below market value fix it up and sell it for a profit.
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How can I find out which foreclosure properties are for sale?
Right here! ForeclosedHomes.com has thousands of available foreclosure listings for you to choose from. Find the foreclosure that is right for you!
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How do I get more information about the foreclosure properties that are for sale?
Most of the foreclosure properties listed on ForeclosedHomes.com provide the name and phone number of the listing agent. If you are a potential buyer, please contact the appropriate listing agent directly.
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How do I buy foreclosed property?
Start right here. Foreclosedhomes.com is your one stop resource for all the information that you need to buy foreclosures. At ForeclosedHomes.com you will find:
- A Nationwide database of foreclosure listings
- Information on the foreclosure process
- Property reports to help you research the foreclosure that interests you
- Finance information
- State Foreclosure Laws
- Investment information
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Do I need a real estate agent to buy a foreclosure property?
A real estate agent is needed to purchase government owned foreclosure property, but you don't need one to purchase Real Estate Owned (REO) properties or foreclosure auction properties. ForeclosedHomes.com does recommend that you find a real estate agent to help you through the buying process. To find an agent, please contact the agent listed on the foreclosed property, or contact your local real estate broker.
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What is a pre-foreclosure?
A pre-foreclosure is the period before the foreclosure auction when the borrower is more than 90 days delinquent on their mortgage payment and a notice of default has been recorded. The main purpose for this phase of foreclosure is to give the borrower time to sell their property or to pay back their loan to the lender. This is often the first phase that an investor or homebuyer has an opportunity to negotiate with the homeowner or lending institution to purchase the property.
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How can I purchase a pre-foreclosure?
You must submit a written contract directly to the owners in order to purchase a pre-foreclosure property. Contact the property owner by phone or write them a letter. Remember handle them with care. This is a stressful time for the homeowner. They are trying desperately to save their home or come up with a solution to avoid foreclosure.
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What is a foreclosure auction?
The foreclosure auction comes at the end of the foreclosure process when the homeowner can no longer repair their financial problems with the lender. The person with the highest bid gets the foreclosed property. Remember if you are going to be buying a home at a foreclosure property auction you will be bidding against other investors and homebuyers. Do your homework in advance and know how much the property is worth, how much is still owed on the property and if there are any liens against the property.
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How do I find foreclosure auctions?
Right here! Foreclosure auction properties can be found and viewed at ForeclosedHomes.com.
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What should I do before attending a foreclosure auction?
Familiarize yourself with the auction process." Go to the courthouse to observe the auction process before bidding on a foreclosed property.
- Know where the auction is taking place
- Research your State foreclosure laws
- Phone ahead and ask about any requirements needed for buying at the foreclosure auction
- Research the property
- Determine your bid amount
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Will I be able to inspect the property before the auction?
In most cases you will not be able to inspect the property before the auction. Make sure you research the property that you intend to buy. Auction purchases are "as is" with no warranties given, no title insurance provided, and in most cases are cash-only. You need to know as much about the property you are bidding on before the auction takes place. A great way to research the foreclosure auction property you are interested in is by ordering a property report through ForeclosedHomes.com.
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How is the opening bid at a foreclosure auction determined?
The opening bid at a foreclosure auction is based on the total amount owed to the foreclosing lender, interest incurred, late charges, penalties any liens placed on the property by other institutions, and may include fees incurred because of the foreclosure proceedings. If no one at the auction places a bid above the opening bid amount the foreclosing lender gains possession of the property.
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What are the bidding procedures?
Bidding procedures vary from State to State. Make sure you familiarize yourself with the bidding procedures in your area before you start bidding at a foreclosure auction.
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How much money do I need to bring to the foreclosure auction?
Some States require foreclosure auction bidders to bring the full amount they want to bid in the form of cash or a cashier's check to the auction. In other States, bidders are required to bring a percentage of the bid amount to the auction and pay the rest of the amount within 30 to 90 days. Because foreclosure procedures vary from State to State be sure to familiarize yourself with the foreclosure process in your State by reading ForeclosedHomes.com's foreclosure laws.
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What is an REO?
An REO (Real Estate Owned) is a property that the bank purchased at auction or went back to the mortgage company after an unsuccessful foreclosure auction. The bank now owns the foreclosure and the mortgage no longer exists.
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How do banks sell REOs?
Each bank or lender conducts its business in a different manner. The bank or lenders goal is to get the best price possible for the property they are selling. Most banks have separate departments that manage their REO inventory.
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How do I find REO properties?
You can find REO properties right here at ForeclosedHomes.com.
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How can I purchase REO properties?
Most of the REO properties listed on ForeclosedHomes.com provide the name and phone number of the listing agent. If you are a potential buyer, contact the appropriate listing agent directly.
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Do I need a real estate agent?
ForeclosedHomes.com does recommend that you find a real estate agent to help you through the buying process. To find an agent, please contact the agent listed on the foreclosed property, or contact your local real estate broker.
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Should I get pre-approved for a mortgage before buying an REO?
Yes! Pre-approval for a loan is important for a potential homebuyer because it ensures that the buyer is in a financial position to purchase a property, and it places the buyer in the strongest possible position to negotiate with the selling agent of the REO property. When a potential homebuyer already has pre-approved financing in-hand, negotiations with REO selling agent and the lender go much smoother. Pre-approval gives you, the homebuyer, a concrete idea of what you can afford and shows the selling agent that you are serious about buying a home. You can start the pre-approval process right here at ForeclosedHomes.com.
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What type of lender should I look for?
When buying a REO property the best type of lender to work with is one who understands the foreclosure process. A knowledgeable lender can guide a homebuyer through any potential pitfalls that may crop up and ensure that the proper steps and procedures are being followed, such as ensuring that the property being purchased is FHA-compliant.
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Do government agencies sell foreclosed homes?
If a property loan was insured by a government agency such as, HUD, Fannie Mae, or Veterans Affairs, the governing agency will reimburse the original lending institution and take possession of the foreclosed home or property and sell it to the public mostly through a property management company.
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What is a HUD foreclosed home?
The Department of Housing and Urban Development or HUD is a government agency that sells foreclosed homes that were secured by FHA insured mortgages. HUD pays the original lender the amount due on the loan plus any additional expenses. HUD homes are handled by property management companies and are sold at auction to the highest bidder.
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How do I purchase a HUD foreclosed home?
A HUD certified broker is needed to assist you with the purchase of a HUD foreclosed home. A broker will submit the auction bid on your behalf. If the bid is accepted or denied your broker will be notified. If the bid is accepted the broker must organize and submit your seller’s agreement within 48 hours.
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What is a VA foreclosed home?
The VA or Department of Veterans Affairs role in foreclosure is to guarantee loans made by qualified veterans and members of the military. If VA guaranteed loan goes into default the original lender begins the foreclosure process. The VA then purchases the property from the lender and sells the property through real estate brokers. One thing to be aware of when purchasing a VA foreclosure is that loans on VA foreclosures must be endorsed upfront and 5% must be put down for the deposit.
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What are Fannie Mae homes?
Fannie Mae is the nickname for the Federal National Mortgage Association (FNMA). Fannie Mae buys foreclosed homes (in the form of mortgages) from lending institutions (freeing up capital for the lending institution) and sells them to the public through real estate agents. In order to purchase a FNMA foreclosed home a good faith deposit of 3% to 5% of the homes price is mandatory.
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