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Foreclosure Over View

A foreclosure is the process in which a lender takes the house of a borrower that wasn�t able to pay their home mortgage loan. At the beginning of the mortgage, the borrower is informed that his or her house can be foreclosed if they don�t make the payments, and in the pre-foreclosure stage the borrower is also informed that if they can�t pay those debts, the house will be sold.

The legal act that marks the beginning of the foreclosure process is the �Lis Pendens.� Not all states require a Lis Pendens before a foreclosure; it is only those who require judicial proceedings. Many foreclosures are initiated each day in the U.S., but this is a drastic method that lenders use against those who aren�t paying their mortgages. In most states, the lender is obligated to give the borrower a number of weeks or months to repay at least a part of their debts, and if this doesn�t happen the foreclosure process can start. The borrower is usually allowed to pay the mortgage until the day the house is sold. If the borrower knows that the foreclosure process will start, they will probably try to sell the house. Foreclosed houses are usually sold at low prices and the borrowers try to get a higher price. Either way, the prices of this kind of house are fairly cheaper than other houses on the market, creating a high investment opportunity for buyers. Investors get great deals at auction sales, pre-foreclosure sales or with bank owned homes. The highest profits can be made by going to auctions and pre-foreclosure sales because bank owned homes are usually sold at higher amounts.