A Look At The Existing Bank Owned Foreclosure Market

Foreclosures are always available, regardless of the economic times, because unexpected things happen to people, and they simply can’t continue to pay their mortgage. It does not automatically mean that they should be embarressed, it simply means that circumstances developed which could not be controlled. Records from the Mortgage Bankers Association show that every three months, approximately 250,000 new families enter into foreclosure. Let’s take a look at some information about residences that fall under the heading of foreclosure.

REO (Real Estate Owned) is the same as OREO Bank Owned, and are properties that have become the property of the lending institution that carried the original first home loan. They were offered at public auction, but the opening bid was never met, and the institution deemed them as an unsuccessful sale. REO sheets are created from which the bank asset personnel work in trying to get the properties sold through other means.

Once a property becomes Bank Own, they are turned over to an asset management group to market and sell. Usually an NRBA (National REO Brokers Association) Real Estate Broker is selected to list the property, but some lenders believe they get better results selling the properties from their internal departments. Banks are not in the business of managing rental properties, so they sell them to clear their inventory.

When a property is presented as a below market opportunity, it means the lending institution needs to get it off their books, and the property may have been sitting empty for an extended period of time. In these cases, there could be considerable repairs, and other work involved, in bringing the property back up to codes. These are the properties which could be considered a good deal by investors.

HUD/VA properties are not owned by the government, nor did the government put up the money to purchase the properties. These agencies only guaranteed the loan, in the event the borrower failed to be able to continue making payments. Once that happens, the government ends up with possession of the real estate, and they are listed on their site as foreclosures.

Pre-foreclosures can be a win-win situation for all parties concerned. In these situations, the lending company has to agree to allow the owner to remain in the home. This prevents a family from being dumped out in the street and become homeless, but it also protects the lender by having the home occupied and less chance of vandalism. The owner is still responsible for the condition of the property.

Short Sales are simply pre-foreclosures which are under the same type of agreements, and the occupants are allowed to continue using it as a residence. In some cases, a government agency known as HAFA can become involved, and provide some financial incentives, which could help resolve the situation for the lender and the homeowner.

Foreclosures are something which simply happens in life, and are not always an intended outcome. Rules and regulations apply to the proper handling, of these circumstances, by all parties concerned. Whether it is the buyer, lender or person whose property is foreclosed on, these properties are eventually for sale.

Learn more about how to find foreclosures for successful investing, and for taking advantage of below market opportunities. We also provide insights on how to buy foreclosures while avoiding costly mistakes.