One result of the real estate plunge is that there are more choices than ever in real estate foreclosure auctions. Although the economy may be bad now, it’s certain to rebound sometime in the future.  Unless there’s a massive drop in the American population, people are still going to need places to live, which means that homes will always be needed, even if they aren’t worth as much as they once were.  Some people still consider properties as valuable as gold.

Although you could subscribe to a foreclosure listing service that inform you whenever foreclosure auctions are going to occur anyplace in the country, you’re asking for trouble purchasing property in a marketplace you know absolutely nothing about.  For example, it’s really no good buying a mini mansion in South Carolina if it is positioned in a town hit by a typhoon this past year.  What you need to accomplish is understand what specific market you would like after which wait for a foreclosure auction inside your preferred area.

It is perfectly okay to contact the owner of the property to try and do a deal so the property doesn’t go on the foreclosure auction block.  Usually, owners are given about a month to find a buyer.  It’s often much easier for banks or the government to deal with sales of foreclosed property than an auction.

If things don’t work out, you can still bid on the auction.  It is up to you to find out what realtor is handling the auction and if you can phone in a bid or if you have to attend in person.  It’s not up to the owner of the property to let you know all of the gory details.  Since laws about bidding on foreclosure auctions differ in each state, you have to acquaint yourself with your state’s laws (or the laws of the state where the property is located).

Because you are making such a huge investment, you don’t want to completely trust the words and reports of others.  You need to go into the property and check it out yourself.  Even if there has been a detailed inspection report from the bank or creditor’s evaluator done, don’t rust it.  Get your own home inspector to check it out.  In this way, you will know how much you should bid or even if you should bid at all.

Depending on the foreclosure laws in the state where the auction is taking place, you may have to pay for the property in full.  Keep that in mind when determining your bid.

The existing administration newly rolled out a federally funded program called the foreclosure avoidance program.  The foreclosure avoidance plan could potentially aid millions of Americans who are struggling to pay their mortgages. 
The financial misfortune in Chandler, Arizona that we are now facing has caused the loss of thousands of jobs every month.  This uptick in unemployment is one of the supreme reasons for the foreclosure avoidance program. 
The radical need for a foreclosure prevention plan also came to fruition because of the break down of the housing market and property values.  With house values being just a portion of the loan values, foreclosure prevention is needed now more than ever. 
The foreclosure prevention program costs quite a few billion dollars.  Foreclosure prevention in the form of the government plan is designed at helping about nine million home owners and is effective until 2012.  This foreclosure deterrence plan allows house buyers to adjust the conditions of their mortgage, but they are only allowed to do it once.
The initial step in the success of this foreclosure deterrence plan is to get the house owners mortgage payment to be less than 30 percent of their income.  This foreclosure prevention method is much like a loan modification that you would do with the bank.  Basically, it is foreclosure prevention because it makes the terms of your mortgage payment comfortable for you and acceptable for the bank.  There are quite a few criteria to qualify for the foreclosure avoidance program.  See if you qualify based on the list below….
 In order to be eligible, the house owner must have the following.
– Obtained your mortgage before January 1, 2009.
– mortgage that is less than $729,500
– supply tax returns and earnings stubbs
– Sign a declaration of hardship
So long as the mortgage interest rate stays high enough, the banks will follow a precise plan to help you lower the total payments considerably for you.  Following that, the administration will do its thing with the foreclosure deterrence program and your payment will be lowered to thirty percent of your earnings or less, which will make it affordable for you to pay. 
That interest rate mentioned above is definite for a five year term in Chandler, AZ.  After the five years are up, the rate can climb by one percent, which won’t be much.  It will rise every year until it reaches either the existing rate or the earlier rate that you had, which ever comes first. Banks are going to get money for each of the loans that they refinance through the foreclosure avoidance program.  
If this gov’t program seems difficult for you, you may want to call a real estate expert who can give you recommendation in foreclosure avoidance.  Yet, you may also consider a short sale.  It can supply greater relief for some than this complex plan.

Do you want to go to the next step? http://group4610shortsale.com” title=”Arizona Short Sale Specialists Free Consultation”>Free Short Sale Consultation by Short Sale Specialists.

Fred Weaver and Kevin Kauffman, Group 46:10, do daily blog – find it here: http://foreclosure-help.foreclosure-short-sale-phoenix.info/” title=”Foreclosure Help – Foreclosure Short Sale Phoenix”>Foreclosure Help – Foreclosure Short Sale Phoenix

When a bank’s level of non-performing loans and foreclosed assets increases to the point that the bank’s costs and expenses exceed its revenues, the resulting deficit erodes the bank’s net worth and reduces stockholders’ equity.  Depending upon the particular bank’s level of net worth, a serious problem will result at some point in time unless steps are taken to mitigate the problems.  This article deals with the administration of real estate properties that have already been foreclosed.

The lender must examine and truly understand both the regional laws of foreclosure, and the documents for the specific loan at hand.   Depending upon the various factors contained in loan documents and the nuances of state foreclosure laws, there are usually factors that dictate the timing of when a foreclosure must be initiated.  In some cases, a lender’s failure to initiate a foreclosure at the proper time might result in the postponement of the foreclosure to a much later time, allowing further arrearages to accrue and possibly further deterioration or damage to the collateral property.

Once the lender has decided to foreclose, the bank needs to have its foreclosure department ready to go.In the common language of a commercial bank, foreclosures are known as “OREO” (Other Real Estate Owned), as separate from the properties the bank uses and operates, such as their own offices.  The equivalent term at savings banks is Real Estate Owned or “REO.”

Here are some guidelines for the successful management of foreclosed properties:

• Make sure that the homeowners’ or fire and extended casualty insurance is cancelled and that the property is added to the bank’s blanket insurance policy for foreclosed properties.  (Note:  I have seen properties lost to fire where there was no insurance coverage due to failure to monitor this activity.)
• Assign the responsibility for managing foreclosed properties to one person.  If the level of foreclosures is sufficient to occupy one or more people fulltime, then this person almost certainly must be a new-hire.Don’t depend on the mortgage consultants that helped create the predicament to somehow solve the problems that they didn’t see coming.  It is advantageous to have some “distance” between the OREO/REO managers and the original borrowers.
• Secure the properties immediately after foreclosure or abandonment.  Maintain a central key repository in the OREO or REO department.
• Keep the properties looking decent.  Do whatever is required to avoid deterioration of the properties.No property buyer, commercial or residential, wants to purchase an ugly piece of real estate.
• If there are things to be fixed on the property, find a “buy & fix-it-up” expert, and provide financing to make an attractive deal for all involved.  Include a commitment to provide financing for the ultimate customer to whom the fix-up specialist will sell.
• Put up the “For Sale” signs immediately after the foreclosure.  (Note:  It is astonishing to me how many times I have gone into OREO and REO operations and found management amazed that a property has not sold, yet there is no “For Sale” sign on it!)
• Only list with a real estate agent if truly necessary.Your Department of OREO or REO will understand the property than any realtor, and your financing will be a major selling point to the purchaser.You are the one to control the financing, not the a real estate agent.
• Talk to the people next door and around the foreclosed property.Friends and family of the owner will often be interested in the property.  Your offering favorable financing might be the factor that tilts the scales in favor of a relative relocating close to another relative.
• Inspect the properties regularly, and document what you find.  Take any needed corrective actions immediately.
• Offer financing to entice buyers.  Remember that a sale turns a cash consuming asset into a cash producing asset.
• Consider holding periods and the net present value of a probable future sale when setting a sales price.The “net” part of net present value allows for the holding costs which include insurance, taxes, any required maintenance, landscaping, and any expenditures such as repainting and other cosmetic projects that may be required to market the property competitively.
• Take note of OREO / REO events and issues at meetings of the Board of Directors.  Directors often have market knowledge and contacts that can help with OREO / REO problems.

Getting all of these done can be quite a challenge.  It requires special expertise to initiate all of these various activities and to keep them moving toward the multiple finish lines

About the Author

This article was written by one of Consolidated Consultants Co’s Banking Expert Witnesses. He is a manager and banking regulator, has successfully managed millions of dollars of distressed and foreclosed properties including single-family houses, condos, and land developments, apt complexes, and many others across the country.  He is available on a contract basis to discuss your bank’s particular needs, and works regularly with real estate experts.