If you are looking for a house to live in, it is always advisable  to buy the property you like rather than to look for a great foreclosure deal. However, it is always a bonus if you can find a property that fits both criteria.

There are several ways to buy a foreclosed property, all of which have their own pros and cons. Some could give you the highest financial gain but with the highest investment risks while others could place you on a safe playing ground but with the lowest financial benefits.

Let's talk about buying a pre-foreclosed property. This method will give you the least amount of money output with the highest available information on the property. Pre-foreclosure happens during the first few months of foreclosure (more often than not 2 to 3 months after the first default). Usually, the bank or the mortgage lender will allow the homeowner to sell the property to help him come up with money to pay off the mortgage default. The "sale by owner" is a medium for the homeowners to prevent their properties from being foreclosed. In most cases, this is done by owners who see sale as their last option and by those who have high equity on the property.

This method, unlike the other two methods, gives you the least risk in terms of the condition of the house. You are free to inspect the house and to make your search for the title deeds. You could also uncover all liens if you like and know the underlying problems. Usually, a real estate broker or the owner of the property will show you the house. If you are interested and you have the money to buy the property, the owner will sign you a deed and will handover the property.

In exchange though, you will get hold of the mortgage that will come with the house. In short, you will have to make the mortgage payments current along with all the fees and charges that come with the property. You will also be left with upgrading and repairing the house.

Some states give the original homeowners a redemption period though. This allows the previous homeowners to get back the property during a certain period of time, usually several months up to a few years, to buy back the property. Thus, all the investments of the current homebuyer will be invalidated.

Buying a pre-foreclosed property is actually safe if you are talking about checking the entire condition of the house but if you don't want the financial responsibilities that go along with it, this method of buying is not really an option for you.

Are you looking to buy a new home?  If you are, you may be turned off by the real estate prices you see on the market.  If so, this doesn’t mean that now isn’t the time to buy a home, but it does mean that you may be looking in the wrong place.  Instead of visiting the online websites of realtors or flipping through their brochures, place your focus on foreclosure properties.  Foreclosure properties are often considered a great buy, as they are easy to find and affordable.

One of the most popular ways that foreclosures are bought and sold is at an auction.  This auction typically takes place at a county, town, or village government office, such as the clerk’s department.  As for how you can find these foreclosure auctions, they are often advertised in local newspapers.  You can also search local records, as foreclosures are public notice.

One of the few downsides to buying a home at a foreclosure auction is the inspection, as you aren’t typically granted one.  Most bidders are bidding on the home as-is.  As-is isn’t so bad, but it may be if you haven’t seen the property.  With that said, since foreclosures are public notice, you should be able to get the address of the property in question.  You will want to drive by.  Although you should not judge a book by its cover, a drive by can give you an idea of what to expect.  When you have doubts, it may be best to move on and target other auctions.

If you decide to attend a foreclosure auction, the last thing you want to do is just show up. That is unless you are scouting to see how an auction works.  When you are serious about purchasing a foreclosed property at an auction, you need to be prepared.  This preparation involves having financing lined up.  Many will require that you either have the money on hand or show proof that you do have the financial resources needed to follow through with the sale.  Contingency loans are generally prohibited.  Check deposits are sometimes required before you can even place a bid.

As for the auction itself, it depends.  It is not uncommon for bids to be sealed.  Once everyone has placed a bid, the highest bidder will be announced.  For bids that are not sealed, the auctioneer will start with a figure, often around $1,000 or less and the bidding will continue on.  If you are the winner bidder, it is important to know that you may not be able to move into your new home right away.  In fact, it is likely that you will be unable to do so.  Many states give current occupants a redemption period or a grace period.  This is where they can still fight to keep their home.  After this point has passed, you can start the eviction process if the current occupants do not leave voluntarily.

As it was previously stated, you may want to attend a foreclosure auction and just sit on the sidelines.  You should be allowed to do so.  If you are unfamiliar with the buying and selling of real estate, foreclosures, or auctions, you can learn a lot.  This knowledge is important, as many fellow bidders will be investors looking to turn a profit, not buy their first home.

Most lending institutions today prefer the process of a Non-Judicial Foreclosure since it doesn't have any complications or legal proceedings attached to it. Simply put, this kind of foreclosure is between both the lender and the borrower.

What is a non-judicial foreclosure?

Non-Judicial Foreclosure is a type of foreclosure without any court intervention. As defined above, this kind of foreclosure is simply between the lender and the borrower, or other persons with connections to the transaction like a mortgage broker or a financial adviser.

When the mortgage has reached its maturity date and the borrower has yet to fulfill the payment of the debt, then the lender will send a Notice of Default informing the borrower that the deadline for the said mortgage has elapsed.

If the borrower did not comply with the Notice of Default then the lender may now issue a Notice of Sale to the borrower, auction houses, and public notices that the property is now foreclosed and will be sold to the highest bidder, usually in cash equivalent.

Notice of Default

Once the borrower has failed to pay the debt within the said deadline then the lender will issue a Notice of Default to the debtor. The notice states that the recipient of the letter has not paid their dues in the stated deadline. The letter will also contain a small extension of the deadline for the debtor to pay the obligation.

If the payment is not made within the deadline stated in the notice, then the lender may issue a Notice of Sale to the borrower, the public, or to those connected to the transaction that the property is now foreclosed and is open to a public auction.

A Trustee Sale Guarantee will be requested by the trustee from a title company; the TSG will give assurance to the various liens and encumbrance against the property. The TSG will also contain the parties to receive the Notice of Default.

The 3-months Reinstatement Period

Before the Notice of Sale is issued to the borrower and to the concerned public, a reinstatement period of 3 months is stated by law for the borrower to reinstate the loan. During this period, the borrower may communicate directly with the lender to try to either extend the loan or to pay it in full to avoid a foreclosure.

Notice of Trustees Sale

During this 21-day publication period, a Notice of Trustees Sale will be issued indicating the place and time of the actual auction of the foreclosed property. The notice is usually published in the local newspapers or in public notice areas. The Trustees Sale will also contain information about the foreclosed property as anything in it that the trustees wishes to auction off to pay the debt.

After the 21-day period, the property is now eligible to be sold in public. The property will be auctioned off to the highest bidder. But 5 days prior to the date of sale, the borrower may reinstate the loan or postpone the sale if he or she deems it necessary.

Time Frame

It is important to know the time frame for the different processed of a non-judicial foreclosure; this will give you an important edge either in reinstating the loan or trying to catch up with the payment deadline.

The Notice of Default (NOD) will be issued once the maturity date of the loan is reached and the borrower did not pay any of the obligations owed. When the NOD is mailed off to the concerned parties, a 3-month reinstatement period is given as an opportunity for the borrower to renew the mortgage to avoid the foreclosure.

After the reinstatement period, a 21-day publication period of the Notice of Sale is sent of to the newspapers to inform the public of the auction time, date and place. The Trustees Sale will contain all the information of the said auction; this includes the time, place, information on the property and all other assets within it that is auctioned off.

After 5 days prior to the published sale date, the borrower will have another opportunity to reinstate the loan or pay off the remaining debt to avoid the foreclosure of the said property.

Non-judicial foreclosure happens without the court or legal system and any legal statutes in terms of proceedings for foreclosure. Though it might sound as if it's almost impossible for the court system to directly intervene with the proceedings of a non-judicial foreclosure; knowing the details about this kind of foreclosure might give you enough grounds to bring it to legal light.

Non-Judicial Foreclosure

In a non-judicial foreclosure, the lender has the power to impose its authority on the said property once it is foreclosed through the use of the power of sale clause.  The mortgage holder, or the lender, will have the ability to make use of the said property to pay off the debt of the borrower by means of a sale or simply putting an embargo on it.

Since there is no legal statute in the transaction between the lender and the borrower, the contract will simply have the essence of authorized in any way the lender might see fit to exercise his or her power over the foreclosed property. In a way, you are simply telling the lender that you are selling the property in advance without any recourse whatsoever.

Check the contract carefully

It is always important for the borrower to read the contract or the agreement carefully before signing a mortgage with a lender; the borrower should take note of clauses and stipulations giving the lender full authority of the property and the like. Take note of the maturity date, interest rates, and hidden fees that the lender might have inserted in the contract.

Grounds to bring non-judicial foreclosure to court

It is true that a non-judicial foreclosure is definitely outside the ambit of the courts and the law since the agreement is between the lender and the borrower, but is also possible for the borrower to bring this foreclosure by power of sale into legal hands.

For the side of the lender, it is almost impossible to bring the matter into court since it's almost impossible to sue a borrower for repayment of the said property. But the borrower may, or may not, have the capability to vie for a court hearing even if the foreclosure is non-judicial.

It is important to know the process concerning the foreclosure of a property in non-judicial terms, like the time frame for the issuance of notices to the actual auction of the sale. If the lender has breached certain aspects of the process then you may bring that up to court to file a Temporary Restraining Order (TRO) on the lender to stop the foreclosure or sale of the said property.

If you are not sure if it is possible to bring to court a non-judicial foreclosure then you may need to consult with someone who is knowledgeable about the working of the law when it comes to mortgage and foreclosure. Consulting a lawyer or a financial adviser regarding the state of your foreclosed property and possible grounds to bring to court to enjoin the foreclosure would be your best bet in the situation.

How A TRO works:

When you have successfully uncovered some grounds to bring the non-judicial foreclosure to court then an issuance of a Temporary Restraining Order (TRO) will be inevitable.

A TRO is a kind of court order stopping the lender from foreclosing the property for a short period of time, usually around 2 weeks or so while the court is conducting a formal hearing on the matter. Under the context of a pending foreclosure, the TRO will enjoin the trustee and the lender from continuing with any non-judicial foreclosure to the property of the borrower until further evidences show the invalidity of the borrowers lawsuit.

Non-Judicial to Judicial

It is true that a non-judicial foreclosure will leave the court out of the transaction, but if the borrower pushes through with the lawsuit when they have sufficient grounds for one will practically turn it into judicial in a blink of an eye.

Since most lenders will opt for a non-judicial foreclosure to save costs in processes and fees that accompanies the said transaction, turning it into a judicial foreclosure will add some more costs to both the borrower and the lender.

Many homeowners facing foreclosure proceed to trash and vandalize their homes as they leave , more often this scenario is the norm. Although it is highly illegal to destroy the property and get back at the bankers who are foreclosing your home it is also an understandable human response to a tragic and emotional situation.

Stripping a real property of its fixtures and fittings and vandalism are against the law. But this doesn't keep the previous homeowners from smashing the glass windows and doors of their foreclosed house or from tagging the walls. Acts such as these are unforgivable and have repercussions that many distraught homeowners choose to ignore.

Such people think that they can get back at the banks that foreclosed their houses. But what they don't understand is that they are not hurting the bank or their creditors, instead they are hurting themselves. Vandalism is illegal and it is punishable by law. If the house has a homeowner's insurance, the bank will surely submit an claim to the insurance company to help cover the damages and compensate for the missing real property fixtures. (Please take note that house fixtures such as cabinets, countertops, electrical wirings, vents, air conditioning, doors, copper pipes, and other built-ins are considered as real properties. Any damage done to these will be accounted for.)

The home insurance company would then go after the sellers of the house and collect their losses. Like all types of insurance companies, a home insurance company is relentless and would stop at nothing to recover its underwriting losses.

On the other hand, home buyers, who like the previous home owners are hoping to buy a piece of property they can live in, will soon realize the gravity of what the previous homeowners have done. It is quite hard to imagine how they could be satisfied with a foreclosed house that was damaged by the previous occupants. However, they could be protected by the insurance company that covers the property.

Investing in a foreclosed home involves some risks that are inevitable. But this does not negate the fact that it is quite gratifying especially if you were able to find a great deal. But great deals are quite hard to find and will require you to do considerable research. If you are interested in a foreclosed home, ensure that you do your homework and visit the property - you don't want your new investment to require a total over haul as new fixture and fittings are needed to make it livable.

Homeowners facing the prospect of foreclosure are often tempted to vandalize the home and strip out the fixtures and fittings. Unfortunately this is the reality in many instances and prospective buyers of the foreclosed property have to contend with a property that has been trashed.

Stripping a property of its fixtures and vandalism are against the law. But this doesn't keep the previous homeowners from smashing the glass windows and doors of their foreclosed house or from tagging the walls. Acts such as these are unforgivable and have repercussions that many distraught homeowners choose to ignore.

Such people think that they can take their revenge on the banks that foreclosed their houses. But what they don't understand is that they are not hurting the bank or their creditors, instead they are hurting themselves. Vandalism is illegal and it is punishable by law. If the house has a homeowner's insurance, the bank will surely submit an claim to the insurance company to help cover the damages and compensate for the missing real property fixtures. (Please take note that house fixtures such as cabinets, countertops, electrical wirings, vents, air conditioning, doors, copper pipes, and other built-ins are considered as fixtures. Any damage done to these mustl be accounted for.)

The home insurance company would then go after the previous owners  of the property and collect their losses. Like all types of insurance companies, a home insurance company is relentless and would stop at nothing to  in order to get its compensation. Ultimately even though it may seem to be very satisfying to trash the home it will end up costing you in the long run.

Investing in a foreclosed home entails with it some risks that are inevitable. But this does not negate the fact that it is quite gratifying especially if you were able to find a great deal. But great deals are quite hard to find and will require you to do considerable research. If you are interested in a foreclosed home, ensure yourself that you are backed with secured information so you won't be surprised by whopped fixtures in the house once you decided to move in.