You have several options to consider if you are in the market for purchasing a home that has either been foreclosed on or is in the process of being foreclosed on:
Preforeclosures Preforeclosures are properties that are still owned by the borrower but the borrower has defaulted on one or multiple mortgage payments. Borrowers are eager to sell since they are near foreclosure and can’t afford to default on any additional payments.
Auction Properties Auction properties which are properties that go to the public for auction if the owner is unable to make the necessary payments or sell the property. If you are interested in acquiring such a property, you should know that these auctions are open to both investors and homebuyers and it goes to the highest bidder. You can typically find information on auction properities through RealtyTrac (an online marketplace of foreclosure properties), National Auctioneers Association, foreclosure auction firms or your county clerk. If you call the county clerk, be sure to clarify that you are looking for listings of mortgage foreclosure auctions. You should also look at lisitings in your local paper. You will have to make a deposit on the day of purchase and have the rest of your financing accounted for, as you will have up to 30 days to pay off the balance and close the property.
Real Estate Owned properties Real Estate Owned (REO) are properties that have not been sold at auction and are then in the possession of the lender, who is usually quite eager to sell. Note, many lenders deal with real estate agents directly so you may want to get in touch with your local realtor about these listings. Remember to ask the lender about the loan policies and financial terms. There are some lenders who may even be willing to offer you a loan to buy a REO property.
U.S. Government-owned properties (owned by US Government Agencies, Fannie Mae and Freddie Mac) A final option is properties that are eventually acquired by the government. When such properties are foreclosed, the government agencies reimburse the lenders for the loan amount and certain costs of foreclosure. The government takes ownership of the real estate and subsequently sells the properties to the public through contractors and realtors. For the most part, the property is sold in its current condition. To incentivize the purchase of a foreclosed home, Fannie Mae recently announced that people purchasing a Fannie Mae-owned HomePath property will receive up to 3.5 percent of the final sales price and use it towards the closing cost or for home appliances. The offer is available to those who close on a property listed on HomePath.com before May 1, 2010.
Below are links to the different U.S. Government-owned home listings.