Foreclosure Investing &
The Mortgage Foreclosure Process  

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Understanding the mortgage foreclosure process is crucial when buying a bank foreclosure or FHA foreclosures. Understanding foreclosures will allow you to intelligently become a foreclosure investor and build your wealth. If you want to learn how to buy a foreclosure the following links will help you out.

Although the particulars of the mortgage foreclosure process varies from state to state the basic premise is the same.

At its basic level, a mortgage is a contract between a borrower and a lender. The lender gives the borrower money and the borrower says he will pay it back. In addition to his promise to pay, the borrower also gives the lender a "security interest" in his property, otherwise known as a secured loan. This, in turn, gives the lender the right to take over the property should the borrower not live up to his agreement.

mortgage foreclosure process

Note that in many states, you really don't have a mortgage but instead a "note secured by a deed of trust." When this happens, the borrower signs a promissory note. This additional document spells out how the lender can enforce his "security interest" in the property – i.e. how the lender can take the property away.

If the borrower doesn't live up to his agreement by not making payments or not paying property taxes, these are considered "events of default". When a lender is convinced that the borrower will not comply with the agreement, he files what is known as a Notice of Default.

This notice starts the clock ticking. The procedure after this varies greatly. But in all cases, at some point in time, if the homeowner does not make up the missed payments, the lender will end up owning the property and will try to sell it to someone else. So what? You ask…

Understanding foreclosures is important because the mortgage foreclosure process provides several opportunities for you to buy the property under market value and possibly get a “great deal”. You could be looking at the “buy low” portion of the “buy low, sell high” equation.

There are three periods of opportunity for you as an investor in the mortgage foreclosure process:

  • Pre-Foreclosure – when a person falls behind on the payments and lender issues the Notice of Default the property can be bought for less than what is owed on the mortgage. This can be done through a “short sale” or by taking over the existing loan if you know how to do this.
  • Auction – if the lender goes ahead and forecloses on the property then the property is auctioned off (public or private auction depending on state laws) and can be bought by highest bidder. Again, the property may be bought significantly under market value.
  • Post-Foreclosure – this means the lender went ahead and foreclosed, nobody bought it at the auction and it is now owned by the lender. They will list it for sale with all the other properties in the real estate market. In 2009 there are thousands of these “bank owned” properties in every state. FHA and HUD foreclosures fall under this category.

All three of these periods provide an opportunity for the foreclosure investor. The lender, most of the time, will sell these properties at a DISCOUNT, meaning, for less than what was owed on it, and many times for a lot under what was owed. This makes buying foreclosures a potentially highly profitable investment… if you know what to do with them.

You can learn more about how to buy a foreclosure, FHA Foreclosures and HUD foreclosures by following these links and seeing the details involved. By sharing my experience with them I want you to see how you can invest in these opportunities.

The following links provide information on different aspects of foreclosure investing and what my experience has been. When I started doing this there was a lot of stuff I did not know so I want to share as much of my experience and research as possible so you can learn from it and you can see how you too can do this.


Learning More About…

Buying Foreclosures – Creating Wealth with Foreclosure Investing

Buying Foreclosures – Creating Wealth with Foreclosure Investing, part II

Foreclosure Pictures – My First Foreclosure Investment

Buying Foreclosures – Creating Wealth with Foreclosure Investing, part III

Foreclosure Pictures – After Repair Pictures

Creating Wealth with FHA Foreclosures

Understanding HUD Foreclosures

Budgeting and Scheduling Tips for The Foreclosure Investor

Atlanta Foreclosures Hit New Records - Are these foreclosure records good or bad for house flipping?


photo credit: http://www.flickr.com/photos/respres/2539334956/



Check back soon for the follow-up posts on Foreclosure Investing or subscribe to my blog and RSS feed so you get the updates when they are posted.


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