With national foreclosure default filings continuing to soar in the five months of 2006, evidence mounts that increasing numbers of U.S. homeowners are struggling to stay current on their monthly mortgage payments.



Now builders are facing a downward market pressure from the rising numbers of foreclosures. As evidenced by the drop in home sales reported by builders, speculators are realizing their "investment" are starting to lose equity as property prices drop, they in turn are forced to lower their asking price.

Add to the problem an increase in mortgage rates and a hit to the budget for gasoline, and home buyers have lost a huge number of their buying power

All these downward real estate market pressures continue to build and as foreclosures start to flood the market, prices will drop even faster.

Consideration points:

• 1. Foreclosures are adding to supply.



• 2. Home builders are still adding to supply.



• 3. Real estate investor psychology has changed, reducing demand.

It is these market conditions that will enable the shrewd real estate investor or first-time home buyer a unique opportunity to obtain real estate proerty during the market slowdown.

Foreclosure Process Overview

Each state has its variation on the foreclosure process: two processes a foreclosure can happen:

Judicial Foreclosure: (Time Period – 10 to 11 months)

• 1. Homeowner defaults on payments for three consecutive months.



• 2. Lender retains services of an attorney.



• 3. The legal firm will file a Notice of Default (NOD) in the county court.



• 4. A notice of default will be published for four consecutive weeks for public information.



• 5. At the end of four weeks, the house will be auctioned off to the highest bidder at the steps of county court house.



• 6. The homeowners is given six months to bring their account current and pay off lender.



• 7. If the homeowner succeeds in refinancing or selling the house or some how raises the enough cash to pay the mortgage off, they can still save the house in this six-month window of time.



• 8. After six months, the bailiff from the courthouse will come the homeowner house and evicts the residence and change the locks.



• 9. The house is now officially foreclosed and belongs to the bank or the investor who purchased the house during the courthouse auction.

Non-Judicial Foreclosure: (Time Period – 4 to 5 months)

• 1. Homeowner fails to make payments for three consecutive months.



• 2. Lender will transfer the matter to an attorney firm.



• 3. The legal firm will file a Notice of Default (NOD) in the county clerk office.



• 4. A notice of default will be published for four consecutive weeks for public information.



• 5. At the end of four weeks, the house will be auctioned off to the highest bidder at the steps of county court house.



• 6. The eviction process happens within 3-4 days after the auction and the property reverts back to the lender or the investor who bought the house at auction.

Foreclosure Profit Opportunities

There are three phases to a foreclosure opportunity: Before the trustee's sale, at the trustee's sale, or after the trustee's sale.

* Before The Sale -Time between when the homeowner has stopped making mortgage payments and when the properly is actually put up for sale at auction. Investors take this opportunity to deal directly with the homeowner.

* At The Sale -When the courts seize the property from the homeowner and sell it to the highest bidder. The county sheriff or a trustee handles this process, depending on the state

* After The Sale -If the property fails to sell at auction, or if the lender ends up as the highest bidder, the home becomes REO, or "real estate owned" by the bank. Banks then try to sell these REO properties on the open market, often through a real estate agent or third-party marketing company.

Finding Foreclosure Listings

A number of on-line web sites offer trial memberships, try a number of foreclosure listings sites and evaluate which offers the best most current listings. Since foreclosure listings can be found by visiting the local recorder's office and making photocopies this can be daunting since listings are added on a daily basis.

Using the Internet, a number of web sites allow searches by state, county, city, and zip code. Like with any product, performing your own comparison of foreclosure list sites will give you the best price and value for money. Take advantage of the free trial period offered evaluate their listings. The sites should offer the latest listings with daily/monthly updates.