Flood Of Pre-Foreclosures Coming - Is It Good or Is It Bad?

Buying & Selling Real Estate
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Flood Of Pre-Foreclosures Coming - Is It Good or Is It Bad?

Ken M.
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

Well, it's not good.

Plus Side

1. It will add to the the available inventory

2.  Can't think of a second plus

Negative Side

1. A property in pre-foreclosure has unpaid arrears. You have to bring the arrears current, if you buy before the Auction

2. Any liens go with the property, including unpaid property taxes and unpaid HOA fees

3. Houses in pre-foreclosure are rarely in good shape and usually require rehab

4. Usually you end up having to evict the seller

5. If you target pre-foreclosures in some areas, it's illegal with hefty fines

6. Margins are usually pretty tight dealing with pre-foreclosures, Not much equity

7. If you buy pre-foreclosures, in some locations the seller later can claim you cheated them and sue you

8. If the house was used for drugs, expect unwanted visitors seeking to buy drugs for the next couple of years

9. If you want to flip the property, consider the "seasoning" required

10. It will push market prices down and that's not good if you are trying to sell

11. An abundance of Pre-foreclosures in an area causes insurance costs to go up and property values to go down

12. It's always eventful, but not always in a welcome way



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Scott JohnsonBusiness Member
Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
1y
Quote from @Ken M.:
Quote from @Scott Johnson:

what I mean is, where are you getting the information that states that they're on more pre-foreclosures coming? That's a topic. I would like to see covered.

"No Payment, No Cares" for FHA borrowers is coming to an end.

There was a mortgage letter released a little over a week ago that is telling us now that the Trump administration announced that they're going to be ending the relaxed FHA Waterfall from the COVID 19 era.

What is the FHA waterfall? Basically, it's a program that helped people that had FHA loans stay in their homes a lot longer than they otherwise would be able to, by paying their mortgage payment for them. 

If it wasn't for all the financial assistance from the government, many more foreclosures would have occurred during this time. The government has been intentionally withholding on foreclosing on FHA borrowers.

But since the beginning of the year that has started to change.

Now, the foreclosure process is starting up again.


 Interesting. I'm intrigued to see what happens. From what I remember, they were paying those owner's loans current and then putting a deed of trust on the homes. With that option on the table, I don't doubt that something will happen. 

My only thought is that those loan balances may be a bit too high to work for a lot of investors numbers. But we shall see 😄 I appreciate you, Ken! Great info!

[email protected]
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  • Scott JohnsonBusiness Member
    Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
    1y

    Where are you getting this information?

    [email protected]
    0Reply
  • Scott JohnsonBusiness Member
    Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
    1y

    what I mean is, where are you getting the information that states that they're on more pre-foreclosures coming? That's a topic. I would like to see covered.

    [email protected]
    0Reply
    • Ken M.
      OP
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Scott Johnson:

      what I mean is, where are you getting the information that states that they're on more pre-foreclosures coming? That's a topic. I would like to see covered.

      .
      Sure.
      First you have to believe the previous administration wasn't forthcoming. That's something I wholeheartedly believe. They had a lot of reasons to hide the fragility of the housing market, called "wanting to get re-elected".

      Second, I just bought a property that went through 3 loan mods in 3 years. That is something I haven't seen in 30 years of buying pre-foreclosures. 

      Third, you kinda have to understand the pre-foreclosure process to get this one 30, 60, 90 day delinquents are on the rise

      Many are avoiding foreclosure thanks to ample home equity that allows them to sell through a pre-foreclosure sale,” said Ali Haralson, Auction.com President. “These homeowners can now leverage the power of Auction.com’s transparent marketplace to sell, furthering our mission of protecting homeowner equity.”

      I'll post more as the information becomes available

      1Reply
    • Ken M.
      OP
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Scott Johnson:

      what I mean is, where are you getting the information that states that they're on more pre-foreclosures coming? That's a topic. I would like to see covered.

      "No Payment, No Cares" for FHA borrowers is coming to an end.

      There was a mortgage letter released a little over a week ago that is telling us now that the Trump administration announced that they're going to be ending the relaxed FHA Waterfall from the COVID 19 era.

      What is the FHA waterfall? Basically, it's a program that helped people that had FHA loans stay in their homes a lot longer than they otherwise would be able to, by paying their mortgage payment for them. 

      If it wasn't for all the financial assistance from the government, many more foreclosures would have occurred during this time. The government has been intentionally withholding on foreclosing on FHA borrowers.

      But since the beginning of the year that has started to change.

      Now, the foreclosure process is starting up again.

      1Reply
    • Scott JohnsonBusiness Member
      Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
      1y
      Quote from @Ken M.:
      Quote from @Scott Johnson:

      what I mean is, where are you getting the information that states that they're on more pre-foreclosures coming? That's a topic. I would like to see covered.

      "No Payment, No Cares" for FHA borrowers is coming to an end.

      There was a mortgage letter released a little over a week ago that is telling us now that the Trump administration announced that they're going to be ending the relaxed FHA Waterfall from the COVID 19 era.

      What is the FHA waterfall? Basically, it's a program that helped people that had FHA loans stay in their homes a lot longer than they otherwise would be able to, by paying their mortgage payment for them. 

      If it wasn't for all the financial assistance from the government, many more foreclosures would have occurred during this time. The government has been intentionally withholding on foreclosing on FHA borrowers.

      But since the beginning of the year that has started to change.

      Now, the foreclosure process is starting up again.


       Interesting. I'm intrigued to see what happens. From what I remember, they were paying those owner's loans current and then putting a deed of trust on the homes. With that option on the table, I don't doubt that something will happen. 

      My only thought is that those loan balances may be a bit too high to work for a lot of investors numbers. But we shall see 😄 I appreciate you, Ken! Great info!

      [email protected]
      1Reply
  • James Hodgson
    Member since 2024 · 11 posts · 9 votes
    1y

    Interesting info. I had got behind a couple months on my FHA. Worked out a 9 month "no payment period" than that amount was added as a lien to my property where it still stands. I wonder if these changes will have any effect on that.

    1Reply
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