If you are in the midst of a home foreclosure, then it's good to know the home foreclosure process. If you are a real estate investor looking for some good deals for real estate investing, then you'll also want to understand the home foreclosure process.

The home foreclosure process is complex, but not really that difficult. Although it varies from state to state, there is a fairly standard process used by counties for a home foreclosure.

A home will enter the home foreclosure process when the property owner fails to pay the principle, interest, and/or real estate taxes for a period of time - usually about 6 months. Many owners will skip their property tax payments while maintaining the principle and interest payments on their home.

Most foreclosure procedures tend to result in seizure and sale of the property.

Why Home Foreclosures Happen

The downward spiral of home foreclosures is hard to stop once it begins. You get behind on payments, which makes it difficult to catch up. What happened recently was that many borrowers had loans at "sub-prime" rates. That is, the mortgage rates were less than the prime rate. After a period of 3 to 5 years, the interest rate was to go up to "Prime-plus". If, for example, the mortgage rate was set at 2.5% for 3 years, it would go up to about 7-8% after the initial period, in many cases doubling the payment.

Many people couldn't afford the new payment, so they started down the home foreclosure spiral. The process of foreclosure begins the moment that a mortgage loan payment is 16 days late. Once this cusp has been reached, full-blown foreclosure procedure is usually not far behind. At this point, the mortgage service provider may attempt to get in touch with the delinquent homeowner in order to create some kind of workable repayment schedule.

The homeowner continues to miss payments. Home foreclosure proceedings may start after the homeowner has missed from three to six months of loan payments. From there, the mortgage lender may order a trustee to draft and record a Notice of Default.

The Notice of Default is known as a NOD at the Office of the County Recorder. The NOD aims to put borrowers on notice that they are in danger of facing foreclosure actions. This filing also sets off a reinstatement period that will usually last around five days before the property is officially listed or auctioned off.

When the Mortgage Defaults

Once a home owner is started down this spiral, they'll usually not be in a position to correct the mortgage default within 90 days. If you are doing real estate investing, then you may want to get to the homeowner before this happens. This is called "pre-foreclosure" investing.

At this point, the home sale date is established. The homeowners will receive a Notice of Sale. The Notice of Sale will get posted on the house or property and a copy is recorded at the Office of the County Recorder. Most counties have a section of the local newspaper in which they lost these sales. If not, you can easily get this information from your county office or web site.

Most of these foreclosure procedure trustee sales take place at the county courthouse. The location and time of the sale are usually specified at this time. Most of these foreclosure properties are awarded to the highest bidder at a local auction. Most winning bidders are required to pay in cash, with an initial deposit due upfront, and the rest due within 24 hours of the initial sale.

When the auction takes place, the opening bid is set by a representative from the foreclosure lending company. You'll see that the opening bid equals the amount owed to the lending company - the outstanding mortgage balance, including any built-up interest and extra fees associated with Trustee Sales.

Home foreclosure is a heart-wrenching process. If you are a real estate investor, you've got to think of this as a business transaction. It's easy to get emotionally involved, although you are often in a position to help the person going through the home foreclosure process by helping them get out with a little cash and no black marks on their credit.

Do yourself a favor if you are in the home foreclosure process. Get some help. This is not a time to be proud, or try to keep it a secret. Help is available from many sources, so find someone who can help bail you out.

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