It is the purpose of this research to examine the process of acquiring residential property through foreclosure sales conducted by the Federal Housing Authority (FHA), the Veterans Administration (VA), and private (conventional mortgage) lenders. Specifically addressed in this research are (1) how to locate property offered on foreclosure sales, (2) procedures which must be followed in the acquisition of residential property through foreclosure sales, (3) variations in foreclosure acquisition procedures between FHA, VA, and private lenders, (4) volume of housing available through foreclosure sales, and (5) the feasibility and desirability of acquiring residential property through foreclosure sales by homebuyers.
LOCATING PROPERTY OFFERED THROUGH FORECLOSURE SALES
A mortgage is a debt instrument given by the borrower of money against real property. Any breach of the conditions of the mortgage contract entitles the lender to demand full payment on the contract1. In most instances, of course, such demands are made only when the borrower fails to make the prescribed payments for quite some period of time.
If the reason a lender demands full payment on a mortgage is because the borrower failed to make the prescribed payments, it is logical to assume that the borrower will also not be able to make the full payment to retire the mortgage. It is at this point that the lender has the right to commence foreclosure proceedings2. At the end of statutory waiting periods in foreclosure actions, the lender places the foreclosed property up for sale through auction3. The original borrower is permitted to bid on the property in such auctions. In most instances, however, they do not have the necessary funds to make such bids.
The lenders are required to advertise all foreclosure sales as public auctions4. These sales may be advertised variously as "trustee's sale," "sheriff's sale, " "foreclosure notice," or "tax sale"5. Notices of such sa...