A foreclosure is simply the process by which a lender claims real estate that has a lien against it. The lien arose from a loan in which the borrower(s) signed a document called a trust deed. In states where mortgages are still used, the borrower(s) signed a document called a mortgage.
No matter if it is a trust deed or mortgage, the borrower agreed that if he didn’t make the required payment, usually monthly, the lender could take the property to satisfy the debt. The process of “repossessing” the property is called foreclosure.
Each state has its own laws covering the process. The statutes or codes specifically spell out the steps a lender must perform throughout the process. Anyone desiring to become a foreclosure investor should be very familiar with the foreclosure laws in their jurisdiction. You do not want to run afoul of these laws as the penalty could be costly.
In a mortgage based state, the lender must go to court to initiate the foreclosure process. Once initiated, the process can take up to one year to complete. Again, the steps are laid out in the law and if you live in a mortgage based state, simply read those sections of the law pertaining to foreclosure. Because lenders have to resort to court action, this is referred to as a judicial foreclosure.
I repeat myself but when it comes to knowing and understanding the law, I believe it is imperative so you can make the most money without costing yourself a fortune or a lawsuit. Again, become familiar with your local laws.
Trust deed state lenders have it easier. Generally, the time frame for a foreclosure is only 121 days without ever having to step foot inside a court room. Because lenders do not have to initiate foreclosure through a court, this is called a non-judicial foreclosure.
Whether the foreclosure is judicial or non-judicial, the process has three steps. Those steps are: pre-foreclosure, foreclosure and post foreclosure. Post foreclosure is often called real estate owned or REO because the lender owns the property. We will post more about REOs in another area.
An important thing to realize is that foreclosure is not a complicated investment vehicle. It seems like such a mysterious thing to most, but if you are properly equipped, it all clicks very fast. All you really need to understand foreclosure is knowing the law as it pertains in your state. The mechanics for investing in foreclosure property are the same as they are for investing in any other type of real estate. Remember this.
This article is brought to you by [http://www.homeforeclosureprofits.com], authors of the heralded guide “Home Foreclosure Profits” which will teach you how to make your real estate fortune in the foreclosure market.
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Great post. I kind of agree but only in certain instances.
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