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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (5747)	10/1/2002 1:05:40 PM
From: Elroy Jetson	Respond to of 306849

I would like to know a little more about the foreclosure process... I'll bet we get a whole bunch of those around here! When properties are over-leveraged, the usual result is the holder of the first deed of trust (usually a bank) takes ownership. This extinguishes all other junior debts like the second, the home owner equity line of credit, etc. The bank will then usually offer the property, through a real estate agent they work with, for either their loan amount or the market value - which ever is lower. Typically they receive offers up to a certain date, at which time they proceed to an escrow with one. As the real estate market deteriorates banks often offer discount financing, warranties and pre-paid expenses. This sets the comparable price for all home owners hoping to sell. So when this takes hold, you get foreclosure prices even if the property you purchase is not a foreclosure. Some real estate shyster gurus will offer up complicated schemes to purchase homes before they go through the foreclosure process. But lets be serious. Before a home owner lets their home go into foreclosure you can count on the fact that they have called Ditech or HFC to obtain a loan for 125% of the value of their home. The true value of the foreclosure process is that it extinguishes excessive debts and places the property in the hands of a disinterested party wanting a expeditious sale.

To: Lizzie Tudor who wrote (5747)	10/1/2002 1:11:48 PM
From: The Duke of URL©	Read Replies (1) \| Respond to of 306849

In the case of foreclosures banks are willing to deal to get the house off their hands, correct? I would like to know a little more about this process... I'll bet we get a whole bunch of those around here! It depends, 15 years ago when banks were in the banking business, the first thing they wanted to do was get the "REO" [Real Estate Owned] off the books. When the property is foreclosed, the loan has been written down. Now and over the last number of years, with the banks allowed to be in the re business by glass stegall revoked, or by fiat of alan greenspan, they will play with the house. Since the are federally insured, the taxpayer, in effect guarantees the stop loss, so they take their own sweet time and the price they ask maybe higher than the market. List of foreclosures are available on the internet, use google. But beware, since the forclosure market because of what I said above is full of fancied opportunities, some of these lists are not "real" in the sense that they are not really useful. You must also consider the effect of cmo's. It may be that the "bank" does not own the house, but has reserved the right to dispose of the collateral to satisfy the loan obligation. This would make them even less motivated to sell it to you.