A property is said to be a foreclosure property if it is taken over by the lender
or the banker as the borrower or the owner of the home did not pay the mortgage as scheduled. The recession has hit a number of owners and there are indeed a sizeable number of foreclosures in the market. People who have been hit badly are employees of various companies who are suffering from a job loss, unexpected expenses or pressed due to some credit problems. The bank waits until three late payments before issuing a default notice to the owner of the property. A trustee sale is set up when the owner fails to come up with the late payments even after the third time.
The lender sets up a trustee sale but buying a direct foreclosure has its own disadvantages. First and foremost, one needs to possess a lot of cash. The title has to be cross checked before anyone really decides to buy the property. The property is won by the person whoever bids the highest in the trustee sale. Obtaining financing for a foreclosure property is almost impossible. Unless you have a lot of cash and a good line of credit that is shown by your bank, you cannot even think of going in for financing on this foreclosure property.
Before buying the foreclosure property, one has to be sure that there are no pending court judgments, liens or any other kind of undisclosed mortgages on the property. If one is buying for the first time, it is better to take the help of an expert who can guide them through the entire process.
If you are wondering where you could come across such foreclosure properties, they are published under the legal notices column in the local area newspaper. The bankers initiate the entire foreclosure proceedings and set the loan amount as the bid price. A novice would find it initially difficult to understand the entire process but there are a few sophisticated investors who have learned the trick of the trade and win the bids easily at sometimes very low prices.