Thursday, May 25, 2006

Foreclosure Process: What's to do if your House is in Foreclosure

We are so involved in foreclosure investing and finding foreclosure deals that we forget the person in foreclosure.

Sometimes it is good to put ourselves in their position and try to understand what the foreclosee is going through. Mainly to be compassionate and understanding of their problems but also to see what processes they must go through to solve their immediate problem.

For this, I utilized this guest article that eloquesntly outlines the foreclosure process.

If you are behind on your mortgage payments for any reason -- job loss, medical expenses, and/or unexpected emergencies -- don't panic! You CAN save your home and you don't have to spend a lot of money to do it.

It happened to me. I am extremely grateful I still have my home. After losing two jobs during the dot com bust and 9/11, I found myself unemployed and unable to pay my mortgage, not to mention any of my other bills. I was alone and afraid. I didn't know whom to turn to and I didn't have a lot of money to pay an attorney or seek other help. I sincerely hope that you don't find yourself in this situation, but if you do, immediately take the steps that I took so you can also avoid losing your precious home. This list is in order of importance.

1. Contact Your Mortgage Company
Call your mortgage company immediately, even if you are technically not yet behind on your payments.Your lender is not in the business of taking homes; believe me, they make far more money lending your mortgage payment to other homeowners. Your lenders may work out a payment plan that will help you until you get back on your feet. There are many different plans they may offer you -- a temporary grace period, a temporary reduction of payments, or, if you have already missed payments, stretching those missed payments for a period of time.

If you are already in foreclosure, you can still work with your mortgage company! I did. I worked out a "forebearance agreement". I had to pay my regular mortgage payment plus a portion of the missed payments every month. I also had to agree to send the funds certified or else they would have taken my home.

2. Speak To An Attorney
Attorneys are expensive. I wouldn't advise paying one at first. Try to find an attorney that will give you a free consultation, or consult Legal Aid. The money that you do have should be earmarked to pay your mortgage. That being said, if you cannot find free or cheap advice, I would then spend the money for an attorney. I was lucky. I asked around and I spoke to a friend of a friend for free. You don't need an attorney until you have to go to court --- then, please hire one!

3. Reduce Your Other Expenses
I immediately cut off my cable, reduced my cell phone plan minutes (I still needed mine for job searching), and made other cuts to my spending until I got back on my feet. For me, that also meant temporarily changing my dietary habits and purchasing cheaper food. I travelled less so I spent a lot less on gas and train fare. If you can, cancel your registration and insurance on your car so you can save those payments. Little changes go a VERY long way. Remember, it's only temporary.

4. Rent Your Rooms
I had three extra rooms in my house and immediately furnished and rented all of the them. This single step helped me save my home. I checked with my town to verify it was legal for me to do so. I used VERY little money to get this going. Once I was started receivng rent from my tenants, I was able to give more to the mortgage company. The benefit of this is that you will get money without working and you can deduct your expenses as a business!

5. Have A Yard Sale
Sell some of your things. I'm not talking about the family heirlooms here; I'm talking about extra pieces of furniture, used books, clothing, CDs, movies, etc. You'd be surprised how much money you can raise!

6. Spend Full Time Hours Looking For A Full Time Job
I have to tell you, for me this step was very hard. I did not want to look for another job, but I had to in order to save my home. For some, this step may take longer than others -- your mileage may vary. Looking for a job is numbers game - network, post your resume on the job boards, look in the classifieds. It may seem like it will take forever, but you will find something. I promise.

7. If Feasible, Work Part Time
Unemployment checks did not pay my bills in the slightest. In addition, receiving rent for your rooms and collecting unemployment may be prohibited under law. Check with your local unemployment office. In the meantime, find a part time job -- even if you are making only minimum wage -- and get some cash in your pocket. This will probably get you more than unemployment will give you anyway! Some part-time jobs have limited benefits as well. Plus, getting out of the house is a big energy booster. Having your home in jeopardy is very stressful and depressing. You NEED to get out of the house!

For some of you, health problems may prevent you from working, or you may have suffered some other unfortunate event that may not allow you to do all the steps above. At the very minimum, contact your mortage company and try to rent your rooms. If you can find a temporary place to live, you may want to consider renting your house in full. You may find a smaller or cheaper apartment or you may be able to stay with family and friends.

If all else fails, you may be faced with the choice of selling your home. Before you call a real estate agent or speak with an investor, call around and check the references of any agents or investors you consider. Not all investors are out to steal your equity or your home; many can make incredible deals with you that may even allow you to still live in your home and purchase it back, if push comes to shove. You may in fact be able to sell your home to an investor and save costly realtor fees. Be careful! Never make any decisions on the spot. Now would be a good time to pay for an attorney's advice.

I made an agreement with my mortage company and rented out my rooms. I found a job, and then kept my tenants to help "catch me up" on my other bills. Then, I just enjoyed the passive income that allowed me to pursue my other dreams. Unfortunately, to get to this point, I did spend money on services that didn't do anything I couldn't do myself -- and, in fact, they ended up not helping me at all. There are plenty of free resources and articles that you can read to help you make the right decision. Good luck. You will be fine.

Annika Smith is dedicated to teaching others how to be not only financially free, but wealthy and happy. Want to be rich? It’s easier than you think. Follow the exact path Annika took to massively improve her life by checking free information at http://cluestocash.rentrooms4cash.info.

Article Source: http://EzineArticles.com/?expert=A._Annika_Smith


Visit House Foreclosure and Investing Blog to read Forclosure Experts discuss Foreclosure Investing and Strategies on a daily basis.

Wednesday, May 24, 2006

Home Foreclosures on the rise because of the Federal Reserve and Inflation Fears

Home Foreclosures on the rise because of the Federal Reserve and Inflation Fears

An excellent Press release today artiulates house foreclosure rise due to Federal Reserve's raising of interest rates.

(PressMethod) - The recent rise in interest rates is contributing to a rise in property pre-foreclosures and foreclosures in Northern California and some home sellers find themselves trapped inside an interest rate bubble!

Wisdom shows us that home owners are getting squeezed by unconventional loans and are now finding that they cannot refinance in a falling market. Ed Fitch of Fitch Properties / http://www.realtydollars2u.com notes that "Sellers were sold a bag of goods by some mortgage lenders looking to make a fast buck and many sellers are now in trouble, and my fear is that it will only get worse." Negative amortization type loans, adjustable loans, interest only loans, 100% financing, 125% financing and now 50 year mortgages. It appears no thought went into the reality that interest rates do rise too! Right now if you are not in a fixed interest rate mortgage you are very likely feeling the pinch. "I am in the trenches, and it is very clear that listings are beginning to stagnate at the low end of the market, there is downward pressure there, and the low end is the driving force of the real estate market." "It can truly be said today that these are interesting times for real estate, and if the fed continues to push too far ... watch out!" Furthermore, with shrinking equity, real estate owners are finding it difficult to replenish their pocketbooks and/or payoff debts through the tool of equity lines that were the norm just a few months ago. Inflation fears continue to spook the market....
read the rest of the story here.




Visit House Foreclosure and Investing Blog to read Forclosure Experts discuss Foreclosure Investing and Strategies on a daily basis.

files under: foreclosure investing

Tuesday, May 23, 2006

Is Foreclosure Investing Getting Tougher or Easier?

Investing in foreclosures is getting harder due to the raising interest rates and the competition. But on the flip side, due to hardening economic condition, the number of houses going into foreclosure is also on the sharp climb.

I recently ran into this articles on Business Week which beautifully explains this.

GLOOMY PERSPECTIVES. Judging by the crowd of several hundred attending the recent Celebrity Conference seminar in Beverly Hills, there are a lot of people who want to fly like the bumble bee -- or at least make money in real estate like The Donald. Rancic's appearance was sandwiched between that of Wayne Gray, who was selling a $4,000 DVD and software package to help folks get rich in tax liens, and James "Mr. Real Estate" Smith, whose pearls of investment wisdom included this observation: "What do you think Jesus did for a living? He was a carpenter -- directly related to real estate."

Out in the real world, storm clouds are gathering on real estate's horizon. On May 10, the Federal Reserve raised its key lending rate to 5%, the highest level in five years and the sixteenth consecutive hike since June, 2004 (see BW Online, 5/18/06, "Will the Fed Go Too Far?"). The cost of a 30-year mortgage now tops 6.6%, the highest in nearly four years. Fears of continued inflation and rate increases have sent the stock market tumbling. Meanwhile, a closely-watched survey of builder attitudes conducted by the National Association of Home Builders recorded its lowest level since 1995.

The higher rates are beginning to impact home values. The median price of a house in the U.S. peaked at $227,000 in the third quarter of 2005, according to the National Association of Realtors. In this year's first quarter the median price was $218,000. "The boom is over," former Fed chief Alan Greenspan declared in a speech to bond firms in New York on May 18. "I think we can safely say that with a strong degree of confidence."

"CAUTIOUS INVESTORS." Some smart investors are starting to cash out. Houston entrepreneur Andrew Segal made a killing buying up second- and third-tier office buildings in the oil patch in the early 1990s, paying an average of $20 a square foot. He's been selling his properties recently at around $70 a square foot, mostly to out-of-state investors. Who could blame him? A lot of money has been flowing into the sector. According to the Mortgage Bankers Assn., commercial mortgage originations totaled $202 billion last year, a 48% increase over 2004.

Brock Harris, a Realtor in Los Angeles, sees changes afoot in his once-hot housing market. Gone are the days of multiple offers over the asking price and buyers agreeing to waive inspections. "What we're seeing right now is a lot of overoptimistic sellers coupled with increasingly cautious buyers," he says. "That's keeping a lot of inventory on the market." Home sales in Southern California fell 16% in April. "The pieces are in place for price reductions to begin soon." Harris says.

Some categories of real estate may fall farther than others. Take second homes and investment properties, for example. The National Association of Realtors reports that a record 40% of all homes bought last year were not a primary residence for the buyer. The trend is particularly strong among Baby Boomers -- more than a quarter of them own at least two homes. "We've seen a lot of entrepreneurs, a lot of customers trek to that market," says Kevin Kane, a senior vice-president at Fox Chase Bank in suburban Philadelphia. On the New Jersey Shore, Kane had been seeing customers buying $750,000 beachfront homes, tearing them down and building two homes on the lot. "They'd flip one and live in the other mortgage free," he says.

"MAKING A BUNDLE." That game is almost over, Kane says. For one thing, his bank has tightened lending standards, requiring at least 30% down in equity, up from just 10% a couple of years ago. Those buyers now have to come up with a larger percentage of cash for a more expensive home. Kane is predicting a decline of as much as 50% in sales of second homes. "The large scale appreciation, I don't think we're going to see it," he says.

Those still interested in investing are looking in more out-of-the-way markets. San Francisco interior decorator Marjory Graue has bought or sold six properties in the past six years, including two homes in Los Angeles and a duplex in Austin, Tex. She is still sitting on a lot in Los Angeles, even though she's already had plans drawn up for a new home. She waiting until the market cools. "Those contractors are just making a bundle," she says.

Instead Graue recently paid well under six figures for a three-bedroom, two-bath house in Marfa, Tex., an artists' community near the Mexican border. Graue figures she'll spend another $30,000 remodeling the place and then either rent it out or flip it. Her purchase price was so low, she doesn't have a mortgage. "My Dad said Rockefeller bought at 10 cents on the dollars and sold at 70 cents," she says. "I see these people keeping loans on top of loans. I'd rather buy really cheap and sell it to somebody else who'll make some money, too."

DEFY GRAVITY. We all can't be Rockefellers, or even Donald Trumps. But BusinessWeek Online will try to help you hang on to the money you've got -- and maybe even make a little more. In our online special report you can find how wealthy investors play the limited partnership game -- (see "Buying Property, Minus the Hassle") -- and read about five real estate stocks to avoid (see "Knowing REIT From Wrong"). We also feature conversations with David Lereah, chief economist for the National Association of Realtors, about his take on the current market (see "Housing Takes a Deep Breath"), and author John Talbott (see "The Growl of a Housing Bear"), whose book Sell Now tells why property owners may wish to head for the exits. And check out our slide show, "Savvy Steps to Enrich Your Home".

Bricks and mortar have been just about the best place you could have put your money over the past five years. What might the next five years hold? You don't have to fly like the bumble bee, you just have to keep your head above the ground.



Visit House Foreclosure and Investing Blog to read Forclosure Experts discuss Foreclosure Investing and Strategies on a daily basis.

Foreclosure Investing and Bird-Dogging Can Be Very Profitable

Foreclosure Investing and Bird-Dogging Can Be Very Profitable

Are you anxious to get a piece of the wealth that is to be found in real estate investing? Until now, if you didn't have experience or cash it would be very unlikely that you'd be successful since real estate investing carries enormous risks and high startup costs.

New investors with a lack of knowledge have lost all of their savings from a bad investment. How can you prepare yourself to take on this lucrative market, especially with no cash? The buzzword among investors for those making a start in this field is "bird-dogging".

Don't forget it. WHAT IS 'BIRD-DOGGING'? Bird-dogging is a system which allows those who are interested in real estate investing to gain experience AND income with no risk. Bird-dogging combines the enthusiasm of the new investor with the money and experience of successful investors. Bird-dogs search out properties that are abandoned, lacking attention or are in disrepair and attempt to contact the owners about their interest in selling. The idea is to find home owners who are anxious to sell.

This may also include owners with foreclosures, divorces or a death in the family. Bird-dogs then show the property to the investor. If the investor is interested or closes the deal they pay a 'finder's' or 'referral' fee to the bird-dog for the service of locating the property.

HOW DO YOU BECOME A BIRD-DOG? Your first step would be to find a company who advertises on signs or in the newspaper that they buy houses, or take over payments. Tell them what you'd like to do and ask them which areas they'd prefer you to look at. Drive around the area and look for 'For Sale by Owner' signs, rental homes and boarded up homes. You will develop a sense of what individual investors are looking for over time.

This is the learning phase. You will pick up what experienced investors consider 'good' or 'bad' deals based on working with them. Expect your finds to be turned down at first as you learn. HOW MUCH DO BIRD-DOGS MAKE? Fees paid vary from $500 to $5000 depending on the investor or the cost of the deal.

Some businesses will also pay you a standard fee if you bring new investors into the business. You can make living as a bird-dog or save your new found wealth to invest yourself when you've mastered the art of spotting the perfect deal!

filed under: foreclosure investing

Monday, May 22, 2006

Finding Pre-Foreclosures For Investing and Profits

Pre-foreclosure investing is very profitable and alot simpler than dealing with the bank after the sale has progressed far or taken over by the bank.

So I wanted to share this great article and let you see the methods by which you can find pre-foreclosure homes


Secrets to Finding Pre-Foreclosures for Short Sales
By Jarad Severe

By far, the most essential step in the short sale process is finding motivated sellers in pre-foreclosure. If you can't find motivated sellers in pre-foreclosure, then it will be very difficult to do short sales.

I will share with you a few of my secrets of finding motivated sellers and you just need to choose 3 or 4 of them to use that fit your style. The idea behind this is to maintain a constant flow of pre-foreclosure leads - potential homeowners who need your help and expertise. There are several ways in which to find motivated homeowners. Newspapers, ads, signs, courthouse, attorneys, just to name a few. See, when a homeowner is delinquent on their mortgage, a legal notice or notice of default must be sent to the homeowner to let them know that their property will be going to auction soon.

Once the legal notice has been recorded, you can go to the courthouse and research these files to find homeowners in default. These legal notices are published weekly, sometimes daily at the courthouse. This will be the first place to look. Go down to your county courthouse and ask to speak to the clerk of courts. Then ask him where they publicize the legal notices or notices of foreclosure or lis pendens. Depending on what state you live in, they may call it something different.

If you can't get any answers, then go to the recorders office. Any legal action must be recorded. You are looking for notices that show homeowners have defaulted on a loan and are now trying to collect the debt. Once you find them, make sure you don't take any of these notices or files out of the building, just ask them if you can make copies. Before you leave, ask the clerk or recorder if there is a county website or newspaper that publishes all the legal notices so you can save time by just looking them up on your computer. Most newspapers have a website with everything on it - yes even legal notices. Let me clarify one thing.

Ideally, you are trying to find homeowners who are 90 days from the auction because this gives you more time to negotiate a short sale with the bank. Every state is required to notify the public, usually by newspaper, that there will be a foreclosure auction on such and such a property anywhere between 3 to 5 weeks before the auction. So be aware that if you find legal notices in a newspaper, the auction is only 3 to 5 week away. You must act very quickly and know what you are doing. On the other hand, when you go to the courthouse or recorders office, typically the homeowner still has a few months before the auction. Real estate agents can become very useful to you. They are constantly looking at real estate, it's their job. Start networking with them. Come up with some sort of win-win.

Let them know if they ever see a property that is upside down or over-leveraged, to give you a call. If you buy the property, let them list it for you. Agents make their money from commissions. You treat them good, they will treat you good. Business cards are another great way to find pre-foreclosures. You can hand them out to everyone and let them know you buy distressed properties. Give them out to real estate agents, attorneys, friends, neighbors and so on. Anything that gets your name out there that you are looking to invest in distressed properties. Make them attractive so people want to call you back. Send them out in all your letters. Money talks for most people. So set up some sort of referral program where you give them money if they know of anyone who may need your help and you buy their home.

I don't know how many people I've talked to just because of a small finders fee. Most of the time it's friends and neighbors of the people you are doing the short sale with. They are so pleased with what you've done with them, they want you to help their friends or family, plus they get a finders fee. You could have something like this - “this card is worth $1000 to whomever finds me a property!” Attorneys work well because a huge number of people are filing for divorce or bankruptcy. If you know any attorneys that specialize in these areas, work with them. They can become one of your greatest assets. Other methods include flyers, magnets, newspaper ads, and signs you see on the side of the road. Try all these ways to find pre-foreclosure leads and then focus on the ones that bring you the best results.

Jarad Severe is a leading authority and expert in Foreclosures. He is President and CEO of Foreclosures and Flippers Inc. Jarad can be reached by email at: info@foreclosuresandflippers.com or you can visit his website at: http://www.foreclosuresandflippers.com to receive more information on foreclosures, short sales and more. Article Source: http://EzineArticles.com/?expert=Jarad_Severe

Sunday, May 21, 2006

Use This Lease Option Method Alternative to Buying a Foreclosure Property

Foreclosure Investing with a Lease Option Twist

One of the many reasons that lease options are so popular is the possibility of creating a No or Low Down payment to purchase the home.

This is done by working directly with the seller of the house, and hammering out a deal between you and the seller.

That means, no banks, no credit checks and no qualifying!

Offer to pay maximum dollar before repairs to entice the seller to offer you good terms for buying the property.

While other investors come by and offer them low-ball insulting offers, you might get the nod for coming out and offering a better deal.

Remember, these people are in distress and if you put together a fair offer for both parties you may get the property at a really good price.

While you are negotiating with the seller, find out just what they need to get rid of the property and go from there.

If the seller can't or won't fix the problem areas, ask them to add the cost into the final sales price to make it fair for both parties.

When purchasing property via "For Sale By Owners" (in other words, no real estate agents), always buy the property on a Land contract or a Contract for Deed.

If you are simply a renter of the property, the seller only needs to get a court order of eviction and your out of the property.

If however you are the owner of the property, the seller will most certainly have to induce what is called a judicial foreclosure.

The difference is probably $10,000 dollars or more in attorney fees, court fees and between 8-12 months time for processing.

A judicial foreclosure is very costly and time consuming for the seller, and would probably force him to negotiate more favorably towards you.

They didn't fulfill their end of the contract by paying the seller their monthly mortgage payment like they should have, yet the seller couldn't do anything until the pending foreclosure had been resolved.

The option that you have your attorney write up, simply will include that the option is not an option unless terms of the lease agreement is met.

The option would be null and void if the renter moves out before the lease agreement is up or is late on any rental payment within that time.

By doing so, if your renter violates any portion of the lease, you simply file for an eviction and your tenant will need to evacuate the property within the time stated by the eviction notice given by a judge.

You don't want another investor in there trying to profit off of your deal.

Remind the buyer/renter that the sales price is based on what the price is at the present time, and not when they had initially started their lease.

Happy Investing


filed under: foreclosure investing

Hazards and Benefits of Flipping Foreclosures Properties For a Living

Hazards and Benefits of Flipping Foreclosure Properties For a Living!

I can't tell you the number of times I've repeated this to people who ask for my opinion, but YES, there is money to be made in Flipping Foreclosure if you treat it seriously and as a business.

What I mean is that you need to put time and effort into finding the motivated sellers, decent location, motivated buyers, good financing, motivated real estate agents etc. etc.

What is foreclosure property flipping?
It is selling the rights to an escrow for a property you've tied up. You don't actually own it, but you are assigning the rights to someone else and letting them close the deal*
(*Note: Make sure you check the legalities and rules in your particular state and always make full dislosure in the contract as to your intentions)

Here's how the process goes down.
Let's assume you're just doing a flip and not taking possession of the property.

First thing you need to do is find a property. A good one that's below market, in a decent location and perhaps one that's in a good school district.

You then negotiate a fair deal with the seller, tie down the foreclosure sale in escrow or title and immediately advertise the house for sale via the best sources outlined in my earlier blog postings.

Once you find a suitable buyer, you negotiate a settlement and exit out of contract and assign the rights to the new buyer.

Here are some Hazards and Benefits of Foreclosure Flipping.

Hazards: Don't fall in love with the house unless you intend to live in it. Remember, foreclosure flipping is a business and the last thing you want to do is buy and hold these. I've been to mansions where I forgot the profit potential and wanted to live in the house soooooo bad! Don't do this. You're there to analyze and tie down the house for flipping.

Hazard: Don't hate the house. Who cares what the house looks like and what area it's located in. Look at the comps, the population density, active vs. sold real estate market in the area, the foreclosure rates, financing on the house etc. Let the market guide you and not the appearance of the house.

Hazard: Always have an exit clause. Don't ever tie down a house unless you know you have a way to exit out of it. In most states, financing is a pre-printed exit clause on every standard purchase contract. You don't ever want to get into a foreclosure transaction and not be able to get out of it (especially if you find information that's not favorable to this deal)

Hazard: You Snooze You Lose. Trust me on this. The opposite of be careful and be pateint applies here as well. I've lost more deals because of my slow progression on some hot foreclosure lists and to this day, I am angry by the profits I've left in the table because I just didn't move fast enough. Put in a good exit clause on your contracts and move at the speed of light on the hot foreclosure deals.

Benefit: It is extremely profitable. You can make as little as $3,000 on a small deal to as high as $200,000 or more on the bigger deals without EVER owning the foreclosure piece.

Benefit: It is zero risk. Because you are not actually buying and holding the property, you have no risk and no out of pocket. You find it, you sell it and you profit.

Benefit: It is very fast. You can research, locate, tie up and flip a foreclosure house in less than 48 hours. I've done in as little as 6 hours and made $10,000 in the process. This is not the norm but after some experience and the right knowledge you can duplicate this.

Benefit: You can make FULL time money on part time work! And it doesn't get any better than that.

Happy investing :)

filed under: foreclosure investing