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| Friday, November 10, 2006 |
| Most Residential Properties in Foreclosure Are Not Worth Pursuing |
 It seems to me that a lot of gurus and websites that advocate foreclosure investing, act like every foreclosure property is a good investment. This is simply not true. In fact, very few foreclosure properties are worth pursuing. Most property owners that are facing foreclosure have refinanced their loans in order to use their home equity to pay off other debt like credit cards.
Your first step after identifying which properties might be worth your time will be to determine if a pre-foreclosure property has enough equity to make it worth pursuing. Once you make contact with a property owner, you will need to find out as much information as possible about their loan. You will need to make sure that you get this information directly from the lender. DO NOT rely on the loan information that is published in foreclosure lawsuits, notice of lis pendens, notices of default or what the owner in foreclosure tells you about their loan.
The best way to obtain loan information from foreclosing lenders is to have the property owner contact the loan loss mitigation department and request the information personally. If the property owner has a computer, you can have him/her obtain the information online. Once you have this information, you need to have the owner sign a release of loan information authorization letter, so that you can verify the information directly with the lender.
The only way to truly verify the loan information is for the lender to provide the owner with a mortgage or deed of trust estoppel letter verifying the type of loan, unpaid principal loan balance, interest rate, total monthly payment and the total amount need to cure the default and reinstate the loan. Make sure that you have the owner sign this letter and instruct the owner to tell the lender to send this information directly to you.
Once you have all of this information, you should be able to quickly figure out how much equity is actually in the property. Remember, the main purpose of this initial meeting with a property owner in foreclosure is to obtain as much information as you can about the loan in default. This will help you to make a faster decision about whether the owner has enough equity in the property to make it worth pursuing. |
posted by Beau Dawkins @ 2:32 PM   |
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