Foreclosure Talk

[Saving in So Cal]

[QUOTE=Cashflow87;116601]what im going to be doing is Researching. im going to contact the bank and nagotiate a short sale on the home, once i get the OK then i contact the home owner and tell them i will save them from going into forclosure by taking over the rest of the payments. once they agree, i bring the nagotiated price to the company ill be working for which is basically a Network of Investors. this company has thousands of investors affiliated with them. once i give the company the house and the nagotiated price, and they Email blast all of their investors saying"you can buy this house at $500,000. its going to need this maintenence: Paint windows and new wiring which will cost you about 10,000." so the the investors think "hmmm i can get this house for 510,000, and i can sell it for 750,000 and make a profit of $240,000....Ill take it!" and once the investor buys the home; I, the "researcher"(the one that found the house and nagotiated the price), get a Finders fee of 10-20% of the profit in this case being $24,000....
QUOTE]

Since you asked. First red flag -- federal and state privacy laws are going to prevent any bank from discussing, much less negotiating with you to short sale someone else's house. Second red flag -- I believe that are consumer protection laws that would affect your ability to simply approach a distressed homeowner and buy them out of a foreclosure. As you might imagine, such homeowners are vulnerable to predators, so there are laws to protect them. Third red flag -- network of investors and finder's fee. I am almost certain that what you are describing would requiring compliance with state and federal securities laws.

While there are certainly legitimate ways to make money from tax sale/foreclosure properties, it does not sound to me as if the method being taught to you is the best way to go about doing it.

[tinapbeana]

Since you asked. First red flag -- federal and state privacy laws are going to prevent any bank from discussing, much less negotiating with you to short sale someone else's house. Second red flag -- I believe that are consumer protection laws that would affect your ability to simply approach a distressed homeowner and buy them out of a foreclosure. As you might imagine, such homeowners are vulnerable to predators, so there are laws to protect them. Third red flag -- network of investors and finder's fee. I am almost certain that what you are describing would requiring compliance with state and federal securities laws.

While there are certainly legitimate ways to make money from tax sale/foreclosure properties, it does not sound to me as if the method being taught to you is the best way to go about doing it.

The foreclosing bank doesn't divulge the details to any one buyer, they're typically required to share the judgement amount in the foreclosure paperwork, which is a matter of public record. Here, it's even published in the paper per the requirements of the law in the instance of a foreclosure.

It likely depends on where you live, but here's what happens where I live (yes, I've looked into the foreclosure market, have even been to the auction.)

1. The entity bringing the foreclosure is required to place an ad in the newspaper BY LAW for 3 weeks before the auction. The ad must state the total judgement against the defendant, the address of the foreclosure, and the contact info of defendant.

2. The ad must also state if bidding will close the day of auction (regardless of $ amt) OR if the bidding will resume at the next auction 30 days later in the event the bank is requesting a deficiency judgement (meaning the bank is closing the mortgage plus seeking a financial judgement). If that's the case, the high bidder at the first auction can only wait 30 days to see if s/he is outbid.

3. Information about the house's tax accessed value and previous sales prices, along with neighborhood comps, is completely and freely available on the county's website.

4. The defendant has until the start of the auction to reach an agreement with their bank for the full settlement amount. How the defendant reaches that agreement (whether they pony up the cash or sell the house to someone else who does) doesn't matter. If the agreement is reached before the auction, it doesn't go on the defendant's credit report as a foreclosure, and the bank gets the full amount that they are seeking. Both parties win.

5. If it goes to auction (i.e. the defendant couldn't find a way to pay), the bank gets the option for the first bid on the house. Bidding is then opened to the floor. You win, you pay 5% down immediately in cash or cashier's check, and you have 20 days to bring the rest of the money.

Since the defendant (homeowner) can stop the process by paying the settlement amount in full prior to the beginning of the auction, thereby preventing the foreclosure and ensuring the banks get the full amount they're seeking, I would imagine that dealing with the owner prior to the actual foreclosure would in fact be the preferred method of handling this situation. I understand the thought about the owner being vulnerable to predators, but the fact of the matter is that the person knows exactly what they have to get out of the house to keep the situation from going to court. If they can sell the house for the judgement amount beforehand, s/he will at least be able to get another house in the future. Otherwise, with a foreclosure on record, their chances are slim.

Also of note for my area, it specifically states on our Master of Equity page that you can't inspect the property unless the current titleholder (owner) gives you permission to enter. It basically says you HAVE to contact the defendant, because you have to ask them permission to look at the property in question.

[y26]

I did a search on this forum looking for this topic. I have been researching this very thing and i think that along with a mortgage you also need to pay any unpaid taxes and other leins on the property including equity loans. All this information is made public at your local deeds. i hope to attend several auctions in my area to help me gain a better understanding.

The only thing I'm confused on is who actually owns your house?? The mortgage company or the city and town. i know the city will take the property for unpaid taxes but do they often sell the property off?? If so does the morgage go with it???

[jodi]

Let me guess...there are testimonials as to how great this system is and how people have made $100,000 in a month. I wouldn't touch it with a 10-foot pole. Network of investors? Sounds very gimmicky to me. Not to mention that most people who are being foreclosed on recently are still upside down in their homes due to 100% financing. You don't see very many foreclosures where the owners have any decent amount of equity in the house. With the market slowing down, or going down in some areas, I think the days of quick profits are over.
And I am a real estate agent, so I do have a little background here. I've heard enough stories of first time investors getting in over their heads very quickly trying to make a quick profit. Good luck to you, but I wouldn't invest any money or very much time in this.