What Needs to be Met in a Foreclosure?

4 Replies

I'm starting to target pre foreclosures. This is the example I would like to be made more clear:

I find a seller who has received a notice of taking, I make him an offer to sell to me and he agrees. How do I know how much back money is owed to the bank? If their are any liens against the property, am I responsible for settling them? Is there a certain amount that needs to be met in order for the seller to be able to sell? Say he owes the bank 200K, do we only have to meet the 200K to have the mortgage be satisfied? 

Any advice is much appreciated, thank you.

@Peter Pezzano All of this is based on my observations of foreclosures in Georgia and may work differently where you are so take it for what it's worth.

How much is owed to the bank is only known by the bank, the seller and the attorney foreclosing. The bank won't/can't tell you and the attorney may or may not talk to you so the seller is your best bet preferably by showing you a copy of the notice they received. 

Other liens would have to be cleared up at closing in any pre-foreclosure sale. At foreclosure it depends on state law. You can find out about other liens by either you or someone else doing a title search.

During pre-foreclosure you have to meet the $200k or it's a short-sale and the bank must approve. At the foreclosure sale the bank could opt to take less.  

I always ask the seller for their most recent mortgage statement. That should show their unpaid principal balance. Add that to the payments in arrears or past due amount and you should have the total payoff. It will not be exact, but good enough for preliminary numbers. You will have to have a title search done to see if the seller has any liens, judgements or anything else on him or the property.

Once you are ready to move forward, you will have the seller ask the bank for a payoff amount and also a reinstatement amount. This will let you know exactly what is totally owed to the bank and what amount you can pay to catch up the payments if you are doing a sub-to.

You can also have the seller fill out a release of information authorization, send that to the bank and you can call the bank and ask them for the payoff and reinstatement amounts yourself.

@Jeff Kehl I appreciate you taking the time to explain that for me.

@Rick Pozos this was excellent, any idea on what a title search typically costs?

About $160 here. It might be a little more in your area. I have heard people say that their title company will do a search for free. I guess I dont smile enough because everyone has always charged me.

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