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What will i have do do if a home has just entered forecloser and I wnat to buy it?

  • April 14 2009 - Riverside
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Answers (5)

Additional NOTE:

FHA has just officially announced a waiver to the 90-day flipping rule for one year, starting Feb 1, 2010 that doesn't just limit it to institutional lenders.

http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf


The waiver is limited to sales meeting the following conditions:

All transactions must arms-length; no identity of interest between buyer, seller or third parties.

Ways to ensure no unacceptable arrangements include:
    *Seller holds title
    *LLCs, corporations or trusts that are serving as sellers must meet applicable State and Federal law
    *No pattern of previous flipping activity exists on property (as evidenced by multiple title transfers w/in 12 months)
    *Property marketed openly and fairly (Any sales contracts w/ assignment of contract of sale") may be a red flag
    *Sales w/ 20% increase over seller's acquisition cost will only be permitted if the lender: 1) Provides supporting documentation and/or second appraisal which substantiates increase in value (I.e. renovation or rehabilitation) 2) Orders a property inspection and provides it to the purchaser. (Borrower may be charged for inspection.) 3) Waiver provides what the inspection must be reviewed and other requirements
*Waiver is limited to forward mortgages

This should allow for some new elligible properties for FHA financing without a 90-day waiting period. If you're an Agent, make sure clients know this can add some expense and the inspections may open up other potential issues regarding the condition of the house. Ultimately, an FHA 203k loan may even want to be explored if repairs need to be made prior to meeting HUD's minimum condition standards.

Happy hunting,
Michael

 

  • January 18 2010
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I'm not an agent but talking from a lender perspective here...

If you're purchasing a home that is in the foreclosure process and it's not listed yet, you'll most likely be dealing with the Loss Mitigation Dept of the seller's lender for final approval. This is true if you're hoping they will delay the foreclosure date, or if you're purchasing it for less than what the seller owes on it. (aka Short Sale). If there is a short sale involved, then negotiations have to be made which typically can take a while. Most Lenders won't even look at it without a formal purchase and sale agreement offer in hand, along with a Real Estate Broker's Opinion of Value report. I highly recommend a qualified Agent or at minimum a Short Sale Consultant to help negotiate. If the seller has enough equity and time to sell it to you prior to foreclosure auction, then line up your financing immediately and go for a quick close. Foreclosure proceedings vary by State and can also depend on how backed up the lender is, and what financial situation the seller is in. Find out exactly what position this property is in before shelling out money for inspections and appraisals, etc... 

If it goes to foreclosure auction, then if you really want the home, you can bid on it and hopefully pick it up there at auction with cash or partially with a short term Hard Money loan. If it doesn't sell at auction and the bank takes the home back, they will most likely re-list it for sale shortly thereafter.

NOTE: The majority of Lenders are acknowledging that normal 90-day anti-flipping rules have been temporarily waived for institutional lenders who have REO properties on their books and are now listing them for sale. (Real Estate Owned - meaning institutional lenders foreclosed and homes didn't sell at auction and are owned by the lender). This didn't allow for investors who purchased homes at auction to immediately put the homes back on the market in under 90 days and qualify buyers for conventional or FHA financing.

  • January 18 2010
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If by entered foreclosure you mean a notice of default has been filed against the owner, one thing you could do is to contact the owner and see if they'd be willing to sell it to you.  If they owe more on it than what its worth, consider hiring a short sale negotiator, or a short sale specialist real estate agent to help get the sale approved by the bank.  The bank will wind up paying the commission for these professionals anyway.

One thing to consider, when dealing with homeowners in foreclosure in California, there are some homeowner protection laws you need to be aware of.  Here's a link to them:

California Civil Code 1695
  • April 15 2009
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Profile picture for Mr Caveat
anti flipping? what are you going on about. he wants to BUY the foreclosure.

you have to wait for it to be listed, unless you want to talk to the bank about the short sale...

just a note it will probably not be on the market until may
  • April 15 2009
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Have an agent set it up on a notifier so that when it comes available, you are instantly notified. There will ba a couple weeks for it to go through its process.

Are you paying cash or getting a loan? If you are getting a loan, you may have to wait 90 days for anti flipping.
  • April 14 2009
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