Residential Property through Foreclosure sales

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

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y the cure date, and determine the name from the original borrower. If the cure date has not passed, it may be possible to buy the house for the amount of the back payments plus closing costs. At the foreclosure sale, the entire mortgage balance must be satisfied in cash. Original borrowers will often be willing to engage in such a transaction, as a means of preserving their credit standing. If it is possible to obtain the property through curing the default, the seventh step is to have the original borrower sign a quit claim deed transferring ownership interest in the property. The eighth step is then to contact the agency or attorney handling the foreclosure sale to cure the default, and have the property recorded in your name . VARIATIONS IN FORECLOSURE PROCEDURES There are few variations in the foreclosure procedures followed by the FHA, VA, and private lenders. One important variation, however, is that both the FHA and the VA will often arrange for someone to cure the default on a property. This action is taken with the consent of the original borrower, whose credit standing is then preserved. The significant advantage for the individual(s) acquiring property in this manner is that it is not necessary to raise the money

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