• 1 out of every 200 homes will be foreclosed upon. For a city like Washington, D.C., that translates to 3,000 Washingtonians losing their homes to foreclosure each year. Mortgage Bankers Association
• Every three months, 250,000 new families enter into foreclosure: One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage. Mortgage Bankers Association.

The foreclosure client

In order to understand the foreclosure business, you must understand your foreclosure client…the homeowner who is getting ready to lose his/her home. Many homeowners do not contact their lenders because they are embarrassed or don’t believe the lender can help, and/or believe it would cause them to lose their home more quickly. Frankly, by the time a home is in foreclosure, the lender does not even want to speak to the homeowner. The homeowner calls and calls but gets routed to other departments and never gets a payment plan that they can afford.

Many homeowners are left feeling depressed and scared. They have no one to turn to and feel hopeless about their situation. When they finally return your call and keep the appointment, a financial inquiry will reveal they are in a financial pit. They may spend much more than they earn, live from paycheck to paycheck, do not have enough in liquid financial assets to support themselves for at least three months, and have horrible credit. To make matters worse, their extended family usually has limited resources as well, and no financial reserve.

Your client – the distressed homeowner- likely got into arrears by: losing their job, experiencing a health crisis, experiencing divorce, and missing at least 2 payments. The lenders are not happy about these situation, not only are they losing money on these investments, but they’re also destroying the community. Homes in foreclosure that become vacant provide sites for crime or other neighborhood problems. One foreclosure alone can impose up to $34,000 in direct costs on local government agencies, including inspections, court actions, police and fire department efforts, potential demolition, unpaid water and sewage, and trash removal. One foreclosure can even result in as much as an additional $220,000 in reduced property value and home equity for nearby homes.

The foreclosure timeline

The foreclosure process begins when a financial distressed homeowner fails to make a loan payment and is served with a summons from his or her creditors. After service, papers will be filed with the county clerk’s office and be made a matter of public record (in some areas the place where deeds and mortgages are registered may go by a different name, such as the office of the land registrar). This notice is usually known as Lis Pendens, which is Latin for "pending legal action." At this point, any attempts by the homeowner to borrow from public credit sources will be met with a negative response. On completion of the publication process, the foreclosure action will continue and the owners have a limited amount of time to pay up, sell, or make other deals with creditors. If none of these actions are taken, a foreclosure sale will take place.

If no one bids the amount owed, the property reverts to the lender and becomes an REO (real estate owned) property held in inventory by the lender. Experienced foreclosure investors, like us, may work in all of these various stages, but the possibility of making a transaction with the homeowner is no longer possible after the property is an REO.

Do you want to become a foreclosure expert? Don’t hesitate. You need the right experience and knowledge to close the deals fast and make money.

The lenders can spot an amateur a mile away…and next to homeowners in debt, an inexperienced investor is the next annoying person on the list. I’ll teach you the 10 biggest mistakes you must avoid and give you all the forms you will need to go through each stage of your foreclosure deal.