Free Bank Foreclosure Property? – For real?

Posted on April 15th, 2009 by saman

A foreclosure is the process where a lender takes control of a piece of property because the homeowner failed to make payments for the mortgage. The lender, either an individual lender or the bank itself, then has the right to sell the piece of property to recover the money owed. The selling of this property usually goes through an auction but may occur through the services of a real estate broker. Of course most foreclosed homes require a little bit of repairs and maintenance work before they put it up for sale or it would be a rather tough process.

Now the cost of foreclosing is never free. The lender has to pay for the legal advice provided by the lawyers and also the court charges, unless of course the lender is a certified lawyer himself. Other costs incurred may include the repairing and maintenance fees as mentioned earlier. This would be especially expensive if the homeowner (soon to be ex-homeowner) did not care to treat the property right. After this tedious and rather expensive process, the lender may still lose money through the auction. If the home is still in a shabby condition or the area is unfavourable, no one would want to buy it.

Now some people may be confused with the terms judicial and non-judicial foreclosures. A judicial foreclosure is where the bank files a law suit against the borrower through court. A notice of default is then issued requesting payment within a time limit of usually thirty days. Should the borrower fail to make payments within the stated period of time, the lender may request the court’s permission to put that piece of property up for sale. This is recorded and published in the newspapers for at least three weeks. The notice of sale is also sent to the owner. In some states, this is the only process available to foreclose a piece of property.

Now keep in mind that the purpose of foreclosing a property is to reclaim any outstanding loan which the homeowner has yet to complete payment for. The lender sees no other way but to do this in the hopes of recovering some of that money. Since the whole process may cost the bank even more money, with a risk of even losing that money after the auction, why would the bank give foreclosed property away for free? So contrary to what you may have heard (or read for that matter), there is technically no such thing as free foreclosure property unless the lender is simply looking to lose money or is very obsessed with charity.

While the price of the property may have taken a substantial hit, it will still cost money as the banks are looking to recover delinquent payments. Foreclosures are becoming more rampant now and are a phenomenon all around the US on a huge scale. Regardless of your social status, should you fail to make payments on your mortgage; the banks have no choice but to foreclose on your home unless a solution presents itself.

Reports show that the market is shifting towards foreclosed property as investors are able to purchase them at discounted prices. Some pieces of property have even plunged by 40% of its total market value. However the ones who suffer most are those who have already lost their homes.