Article  Bank Foreclosures are on the Rise, Should You Take the Plunge? Do you know enough about bank foreclosures to take advantage of the current market trends? There are a number of ways that savvy investors are ensuring they have the necessary portfolio pieces to move ahead financially, even in these challenging economic times. The process is not as intimidating as some investors might have you believe. For the most part, the biggest challenges to purchasing bank foreclosures is understanding the specific differences which may exist where you live or plan to buy property. As a general rule the process is very similar all over the United States. When a home owner defaults on their home or other real property, they begin to receive notices from their lender. Institutions may vary on how long they will allow the home owner to continue not paying their mortgage. After that period of time has passed, the lender will then place the property into a Trustee Sale list. This list is where the properties are subsequently published in a local newspaper for a set number of weeks. Most of the identifying information is included in that listing; things such as the property address, the amount of loan which is being defaulted on, in some locales even the name of the title holder is published as well. After the legally prescribed amount of time in the papers, the property then goes up for auction. At a predetermined date, time and place the defaulted loan is offered at foreclosure auction. There tend to be many other properties that get offered for sale to the highest bidder during these auctions. Many properties can be picked up at these sales for only what is owed on the defaulted loans. For astute real estate investors who have done their homework, these buys provide them with savings which run into the hundreds of thousands of dollars. The reason is that regardless of the true market value, the property being auctioned is potentially sold only for the amount of loan that exists and which was defaulted upon. All other secondary loans are usually wiped off the books when this occurs. For example, a property is worth $250,000 in the current marketplace, but only has an outstanding loan of $125,000. When it is auctioned the bids start at the loan amount. It is not inconceivable that this piece of real estate could sell for only what is owed on it, $125,000. If you have the ability to make this purchase, you have immediately doubled your money due to the value of the home in the market. Of course, to realize your profits you'll be required to either resell the property or refinance it in order to pull that money out of the transaction. Many properties that go through this process, however, do not get purchased during the foreclosure auctions. When this happens, the title of the property then reverts to the lending institution on record for that parcel, home or building. This is commonly referred to as an REO, or real estate owned property. The lenders don't like having to reclaim these properties as they are usually non-performing, or severely under performing assets that actually cost the lender money to have on its books. This is another place where savvy investors can find hot deals on real estate. There are many list providers and subscription services which have all of the REOs owned in your area of interest. Once you have access to these lists, you can then easily contact the REO departments of the lending institution and make offers on the properties. Often times the banks will allow these bank foreclosures to be sold even for less than the amount of the loan that was originally defaulted upon. Because they want to remove them from their list of non- performing assets many banks are willing do whatever it takes to sell them quick. If you're interested, seek out REO lists or subscription services that might provide properties in your Category Real Estate Author Admin Add To Favorites Print This Article Email Article To A Friend Post Comments   Rate This Article (0) 1 - Poor2345 - Good678910 - Excellent Added On 2010-01-21