Starting from scratch
A partner and myself have recently begun investigating the possibility of picking up pre-foreclosure properties. We are essentially starting from scratch as to how to proceed. We have identified several properties from various public records that are in various foreclosure stages and are now at the point of commun icating with both the mortgagor and mortgagee. Since we are not the first to ever do this, there must be some info out there somewhere to show how this process best works. Any suggestions. Also, when looking at this type of property, how do you typically contact the debtor. We are at the point where its time to make contact and are wondering how its usually done. Thanks 
dtj,
I can tell you are new to foreclosures (to include preforeclosures). I would highly suggest that you start educating yourself on foreclosure investing. You can start by reading the posts and articles on here for FREE. Also, you may want to check out your local library or local bookstore for books on REI involving foreclosures.
To clarify any confusion you may have, I explain a little to you. Foreclosure investing actually has three stages: preforeclosures, foreclosure auction, and bank REO. In the preforeclosure stage, you are looking to acquire the property from the homeowner before it goes to the auction. At the foreclosure auction stage, you are bidding at the Sheriff's sale or county courthouse for the property. With a bank REO (Real Estate Owned), you are acquiring the property from the lender. The only times you speak with the lender is if you are going to short sale the property, if you are buying it from the bank, or if you are getting a payoff balance.
Start reading up because foreclosures are one of the most difficult investing techniques out there. You need to educate yourself before you get yourself into a bigger mess than you planned.
Tanya
Thanks again Tanya!
We are looking into preforeclosure because it seems to be a good place to get a good deal, as opposed to competing with other investors at the foreclosure sale or having an agent getting a commission selling property for a bank.
As far as communicating with the debtor, do you have any suggestions as to approaching them? What works well for you? Regarding contacting the bank (or the bank's attorney), we thought once we found a debtor willing to work with us we would see if the bank required the entire accellerated debt to be paid (plus fees, costs, etc) or if the bank would be willing to allow us to reinstate the mortgage and have it assigned to us. Seems better to get a reassignment so you are less money out of pocket.
Does any of this make sense, or are we going down a path that is usually a failure? In the meantime, I will look for some books or other resources describing how to do this (any suggestions?). Thanks again.
There are 3 ways to contact a homeowner in foreclosure: mail, phone, and door knocking. Each can be responsive in their own way, but you have to know how to approach them. You can check out the "Freebies" link and you'll find some sample preforeclosure letters. Derrick Ali has a help kit going around someplace that you can use for mailing or doorknocking also. If you do a search on the forums, then you'll find some scripts that can be helpful.
Once you get in touch with the lender, then you can request 3 things: payoff balance (the entire payoff to buy the property), short sale package (to discount the mortgage so that you can buy it at a lower price), or reinstatement letter and approval to assume the loan. Not all lenders will allow you to assume the loan, so you have to be aware of other options. There is a good book with plenty of examples called "Goldmining in Foreclosure Properties" by George Achenbach. The 4th edition was published in March 1999, so it's not the newest, but it has great examples. You might be able to get it in your library, if not it's $25. Good luck.
Tanya