Seeking To Understand....
What pre-foreclosure is. As the name suggests, i can assume that it is before foreclosure. Are these the names and properties i can obtain from the special proceedings office in my courthouse? Are they about to be foreclosed on and i should attempt to save them before the bank gets them?
Here in florida a Lis pendens is filed first stating that mortgage is in default. If not resolved a judgement is recorded stating date of sale. Up to sale mortgage can be brought current or home sold etc. Lis pendens and judgements can be found at your county clerks office.
From my understanding a property can be secured in a state by either of 2 methods. 1. Mortgage or 2. Deed of Trust. Either can be used by every state uses one primarily over the other. In a mortgage state a lis pendis is filed (meaning lawsuit pending) and in a deed of trust state a NOD (notice of default) is filed. This is basically the bank saying "you're behind in your payments, pay us the full amount or we're taking the property".
Now there are a bunch of things that the occupant of the property can do. Attempt to reinstate the loan, sell the house, let it go to foreclosure, etc. This is generally where investors try to get into a home.
In some cases you can negotiate with the bank to accept less than what is actually owed on the loan. This is called a short sale. It involves thousands of phone calls and a lot of work.
Another case would be if the bank would allow the back payments to be added to the original loan amount and then start making payments. This is called recasting the loan.
There are a handful of other things that can be done, but if the bank isn't happy then the property goes to auction. Some investors pick up property here. The bank has someone with their interest at the auction who bids whatever is owed on the first mortgage. Investors can try to out-bid the bank, but it's sometimes difficult to determine the actual value of the property, how much fix up work it would need, etc. When the house is sold at the auction, it is then foreclosed.
Then, depending on which method your state uses to secure a property, there could be what is called a redemption period. During this time the original owner can payoff the first mortgage and get his house back (not likely or it wouldn't have gone into foreclosure in the first place).
That's what I can give you about foreclosures in a nut shell. I now leave myself open to endless corrections from other investors.
Ryan J. Schnabel