The legal course of action that a provider commences when the solicitor fails to reimburse the loan as per the terms of the contract is called foreclosure. The lender opens the foreclosure route to salvage back the ownership and custody of the property. If the borrower misses three consecutive monthly payments (state specific), then, at the end of the 90th day, or third month, the provider will file a "Notice of Default" at the county recorder's office.
Buying at a foreclosure public sale frequently implies buying blindly. The label of the home can be (and should be) examined before the sale, but that is the extent of the paperwork involved, and a purchaser is basically buying with no idea of any preexisting conditions the home may have. An interior scrutiny prior to the sale is a luxury that does not happen often and shouldn't be expected. The same goes for any paperwork aside from the title. Most probably, your foreclosed, discounted gem (the property to be purchased) may very well be under a line, second mortgage, or court claim about which the client might have no idea at all.
The chance to buy a pre-foreclosure property is there as soon as the "Notice of Default" is filed. The prospect diminishes when the property is sold at the auction. The time between these two proceedings permits a consumer to deal with the homeowner and the lender to bargain and configure an all winning transaction. This is the lone time in the entire foreclosure dealing when the buyer can employ usual mortgage, hard money lenders or ingenious financing practices to buy the property.
As a scrounger fails to pay on mortgage expenses, the original lender seizes back the property and sells it at auction, frequently at a gravely economical price. But identical to a reclaimed vehicle auction, this resale of the chattels is done on a caveat emptor basis: the buyer, however, must be beware that buying a home in auction is not meant for frail hearts and it's undoubtedly not as uncomplicated as it appears.
Foreclosure purchases also necessitate cash in hand, which is a huge hurdle for most people, unless the buyer happens to be sitting on a serious chunk of change. No mortgages or financing is offered on a foreclosure purchase. You pay once, you pay it all up front, and you buy the foreclosure property.
To succeed in Foreclosure and Pre-Foreclosure investing one requires tons of experience, awareness and determination.