how to buy a foreclosure note

Many leaseback options allow the previous owner the option to buy back the property after a specified period of time.
In fact, many large companies including Freddie Mac, Fannie Mae and Bank of America are performing leasebacks on property taken during proceedings.

Nice idea but impossible in the real worldWell, we do have a number of bank clients, including some huge ones, that would not have a problem selling commercial notes, including a single commercial note secured by a single residential property, to a private person.
geo123 said: Well, we do have a number of bank clients, including some huge ones, that would not have a problem selling commercial notes, including a single commercial note secured by a single residential property, to a private person.
SUCKISSTAPLES said:   nizate said:   In my office here in California we use foreclosureradar.com and it’s pretty good as far as finding properties that are in pre-foreclosure, have already foreclosed and are going to auction, or have sold back to the bank at auction.
nizate said:   In my office here in California we use foreclosureradar.com and it’s pretty good as far as finding properties that are in pre-foreclosure, have already foreclosed and are going to auction, or have sold back to the bank at auction.
It really is a good service and it is available in other places, I just know in California they provide more details about the properties including the banks that hold the note and if they have 2nd or 3rd loans against the property.
Even if the homeowner doesn’t have the money to settle the note, we buy notes and either keep them or re-write them so other investors in our network get a nice return and the homeowner gets a lower payment.
A note or mortgage note is similar to a promissory note which is a written promise or obligation to pay a specific amount, with interest, within a specific time frame.
There are a lot of opportunities to make money from distressed properties, including buying mortgage notes on homes facing foreclosure.
A carefully planned, step-by-step strategy for buying mortgage notes, as described here, can lead to financial success.
In addition, it’s possible that after you spend the time and money to vet the property and the owner, the homeowner could avoid a sale completely by working out a deal with the lender to avoid foreclosure, such as a loan modification or a deed-in-lieu arrangement.
In a deal where the owner has no equity in the property, one option is to negotiate with the lenders to do a short sale, which means the lenders agree to accept less than is owed and retire the loans without recourse.
As long as a potential buyer factors these risks into the pricing of the note or the property being foreclosed, and as long as the purchaser knowingly and intelligently understands and accepts the risks, either a courthouse-step acquisition or a note purchase can provide significant opportunities to acquire valuable properties at attractive prices.
So, which alternative is riskier? It is close call that varies from transaction to transaction, but there is a reasonable argument that a purchase at foreclosure sale is less risky than a note purchase, particularly if (as is fairly common) the note seller takes a hard line and provides no representations other than as to its ownership of the loan.
In the case of a note purchase, the buyer embarking on negotiations with the note seller is reasonably certain that if it strikes a financial deal, it will acquire the note and security deed (although there can be adverse claims as to the seller’s title to the note and problems may lie ahead in acquiring title to the property).
The mechanics surrounding the purchase of ANY real estate secured debt instrument (the note) are essentially the same whether you are purchasing from a private note holder or from a bank-type lender.
Once you own the actual debt instrument (the note) there are a number of options available for you to pursue in an attempt to collect or get the note instrument performing.
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You can approach the property owner with a short sale proposal offering a price less than the total amount owed.  This strategy requires the cooperation of the owner and his acceptance of little or nothing at close of escrow and the holder of the 2nd to accept a discount of his note.
The property will probably progress all the way to trustee’s sale.  IF this happens and a bidder buys the property, you will be paid in full, interest and all, on a Note & T.D. that you bought at a huge discount.  This outcome would mean a fantastic return on your investment.
Call any title company, ask for customer service, identify the property address and request a faxed copy of the $150,000 Trust Deed recorded on 10/15/05.  At the same time, request any subsequent assignments of that Trust Deed just in case that loan had ever been sold since its origination on 10/15/05.  The Trust Deed and any possible recorded assignments will contain the name and address of the Jr.
The main advantage of buying at a trustee’s sale (foreclosure auction) is that the moment a property reaches the actual sale date, all trust deeds (loans) junior to the foreclosing loan, below the loan with the asterisk (*) on our report, are wiped off the property.
lender in the amount of $20,000 makes your investment total to be $30,000.  Then taking ownership of the property at the trustee sale, subject to the 1st T.D. in the amount of $350,000 means that you just bought a $500,000 house for $380,000.
After three months of default has elapsed without any action by the owner, the beneficiary (lender) now schedules the property for Trustee’s Sale (foreclosure auction).
The most likely outcome however, is that the property will progress to trustee’s sale, no outside bidders will bid, and then the property will then revert to you, the foreclosing lender.  You now own the property subject to the Sr.
You, the investor could sit back, hope that the property does progress to trustee’s sale and eliminate the 2nd loan completely.  Of course this plan requires at least $350,000 cash to bid at the sale.
lender buyout.  This plan requires only minimal investment and no contract with the property owner at all.  If you choose this option, the first step is to identify the holder of the Jr.
When properties have no equity (as is often the case today) another option is to approach the junior holders and offer to buy their Notes at a discount.  The key to profiting from this type of situation is to know exactly which is foreclosing, and to have knowledge of all the loans against the property.
Now, choose a trustee to process your foreclosure.  (I suggest calling County Records Research at 800/664-2567; they are a full service trustee.  Trustee’s costs are controlled by state and are almost identical statewide.  But, County Records Research has no required up front deposits to start your foreclosure.)  Fax your trustee a copy of your new Note & T.D. to start the process.
It is very expensive for the lenders to be stuck with these properties! The whole key to buying at this stage is to act quickly by approaching the beneficiary (lender), the same day of the sale, before s/he turns the property over to a real estate agent for resale.
The property owners will find the money to reinstate your advances and delinquencies.  If this happens, the return on your investment will be phenomenal on this Note that you bought at a huge discount.  This outcome is unlikely.
Buyers can expect a discount of 10% to 25% compared with buying a home through traditional channels, says Dean Street, an agent and 30-year veteran of foreclosure buying in the western U.S. But the road to auction can be bumpy, too.
Another hassle: Most foreclosures that go to auction get postponed, usually due to bankruptcy or loss mitigation (when the bank tries to compromise with the borrower), says Chris Matty, marketing director of ForeclosurePoint.com. He notes that opening bids also change frequently, especially as home values are marked down further.
Often the principal and interest payments are structured to amortize over a 30-year period like traditional loans, but require a balloon payment — meaning the borrower must remit the entire outstanding principal — after five years.
What this means is that the seller of a private mortgage note cannot expect to sell his note for the outstanding principal balance of that note.
Depending on the other factors, such as property condition, market interest rates and the borrower’s creditworthiness, the price a note buyer would be willing to pay may be adjusted up or down accordingly.
The amount they sell for is based on the principal balance, the number of payments that have been made (referred to as “seasoning”), the number of remaining payments, the home’s appraised value and the borrower’s creditworthiness.
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The concept of “time value of money” also controls how much you should be willing to pay for a private mortgage note.
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Although their higher-than-market interest rates make them attractive as buy and hold investments, private mortgage notes can be sold and thus converted into cash.
This way you, as the tenant, will receive a copy of the Notice of Default and Notice of Sale and know the status of the foreclosure.  You can buy a Request for Notice at stores that sell legal forms or get 1 from the customer service department of a title company.
If you and the lender have not worked out a plan to avoid foreclosure, the lender can record a Notice of Default in the county where your home is located, at least 30 days after contacting you for the foreclosure avoidance assessment.
The lender MUST contact you and anyone else on the mortgage loan to assess your financial situation and explore your options to avoid foreclosure (called a “foreclosure avoidance assessment”).
When a lender uses the nonjudicial foreclosure process against a borrower who fails to pay on a mortgage for his or her primary residence, the lender gives up the right to collect a deficiency judgment against the borrower.
Tenants Together’s Law & Resources:  Information to help you know your rights, answers to frequently asked questions and resources to help you be better informed about foreclosure and your rights as a tenant in a foreclosure.
U.S. Department of Housing and Urban Development (HUD): The Department of Housing and Urban Development’s guide to avoiding foreclosure contains links that can help you find a local HUD-certified housing counselor, learn about refinancing options, and understand the steps homeowners can take to avoid foreclosure.
Note: Before the foreclosure process begins, the lender or loan servicer may send you letters (over the course of several months) demanding payment.
Note: If you are a tenant and want to find out if the place you rent is in foreclosure, you can record, in your county recorder’s office, a form called a Request for Notice, asking that you be notified of any foreclosure proceedings.
During the 21-day period after the Notice of Sale is recorded, any person or institution (like a bank) with an interest in your home has the right to redeem the home up until the nonjudicial foreclosure sale/auction.
Housing and Economic Rights Advocates:  Has consumer pamphlets, tips, and information to help you be better informed about foreclosure, preventing foreclosure, working with lenders, and other resources.
In California, lenders can foreclose on deeds of trust or mortgages using a nonjudicial foreclosure process (outside of court) or a judicial foreclosure process (through the courts).
ForeclosureInfoCA.org: A project of the Public Interest Clearinghouse and the State Bar of California, this site can direct you to legal assistance, advice on avoiding foreclosure, and information on buying a home.
You have up until 5 days before the foreclosure sale to cure the default and stop the process.
exists to bring together owners and operators of residential real estate, interested persons, and related industry personnel for educational and information sharing purposes.
To view these resources, you must be a member of the POA and be logged in.  If you are not a member, you can join .  If you are already a member please login.  If you do not know your username and password please call the POA at:  (732) 780-1966.
The organization is comprised of owners and managers of apartment units and other individuals who work in fields related to the housing industry.
The MLS is fully accessible for any real estate agent, so it is highly recommended that you either get your own real estate license or work closely with an agent you like and trust (after all, a real estate agent is generally paid by the seller, so it’s free for you to use an agent!) However, you don’t need to only rely on your real estate agent to tell you what properties are listed – because you can generally get that information online through many different websites such as Realtor.com, RedFin.com, Zillow.com, or Trulia.com. These sites will help you sift through nearly all the listings and give you at least some of the information about the property.
Buying a property during this period known as “pre-foreclosure” is a common technique used by many real estate investors and can be a good way to find motivated homeowners.
This process is known as the “Trustee Sale.” The bidding generally opens with an automatic starting bid of whatever amount is owed on the property, so no – it’s generally not possible to simply go and bid $1 on a property at the courthouse.
Cash Only – Finally, when buying a foreclosure at the courthouse steps, you will need to have all the money the same day to purchase this property.
No-nonsense Note Buying Information.
The County may try to sell the Tax Title Properties at some future date after the foreclosure sale.
Most people bring a cashier’s check made payable to King County Treasury for the maximum amount they are willing to spend, whether they intend to buy just one parcel or bid on several.
However please note King County Treasury will not provide cash refunds to parties during or after the auction, to offset cashier check overages.
Normally, owners of improved properties subject to tax foreclosure will raise the money to redeem the property before the sale, often at the last minute.
Properties not sold to the public at the auction are sold to King County.
As real estate taxes are in the first lien position, the tax foreclosure extinguishes all other encumbrances including but not limited to Deeds of Trust, mortgages, contracts, liens, judgments and any similar items.
In 2014 the properties subject to foreclosure are those on which the 2011 full year tax is delinquent.
No King County Employee or officer, or person who is an immediate family member of and residing with a King County employee, may bid at the sale, nor may such person bid as an agent or allow any agent to bid on their behalf.
The list mentioned in #2 shows parcels in numerical order by tax account number which, in turn, derives from the alphabetical order of the plat name or from the Section, Township and Range if the property is unplatted.
Parcels may be redeemed from foreclosure at any time up to the day before the auction, thus we do not know what will be in the sale until the morning of the auction.
The map does not show the topography such as ravines, hill, slopes, etc., nor does the map show what is on the property (dense growth, swamp, boulders, etc.). Some properties may be private roads covered by easements for ingress and egress.
The Summons and Notice, which includes a list of the properties, will be published in the Seattle Times classified (legal) section sometime in late October after all our certified mail notifications are completed.
Every year people who have done little or no research or who do not know how to read a legal description buy properties that, to them, are totally useless.
Checks are made payable to the King County Treasury.
Down for maintenance.
By the time a preforeclosure home is listed by a real estate agent as a short sale, the home will most likely be sold at market value.
Another angle is to try to buy a preforeclosure as a short sale prior to the seller listing with a real estate agent.
Some sellers can be current and still do a short sale, so sellers who are current would never really fall into the preforeclosure radar to start with.
Some astute buyers would prefer to negotiate with the seller before the home becomes a short sale.

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