Mortgage loan help: Buying tax liens and pre-auction homes in foreclosure?

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Just got off the phone with Citi (spineless) Mortgage. Can anyone tell me where I can find, preferably in DC, a mortgage broker who could get me a loan I could buy tax liens with and/or buy properties in foreclosure, before the trustee auction? (I know most tax liens are redeemed by the owner.)

  1. Reply
    April 30, 2011 at 1:15 am

    Those are investment loans, and effectivly unsecured. Most commercial banks won’t be doing any speculating like that.

    Understand. These aren’t mortgages. You don’t own any property to secure them to; the underlying premise of a mortgage.

    I’d try the local papers looking for a private investor or take out an ad in the paper looking for one.

  2. Reply
    timber wolf
    April 30, 2011 at 1:31 am

    You could possibly get a HELOC type loan, but a loan specifically to buy liens and foreclosure will be more or less impossible. These transactions require cash, speed, knowledge and a decent lawyer familiar with the game. I’ve purchased several foreclosures, all after the sheriif sale/auction, as getting to the mortgagor is near impossible (I’ve tried – when I can even find someone they tell me to wait until it comes to market). Further the redemption price is usually for what they have into it, on paper, and is usually more than the listing price.

    For example, I purchased a property redeemed for $ 150,000 (yet assessed at only $ 80,000 fair market value) for $ 29,100 after it hit the market. Bear in mind I submitted a bid within 2 hours of the public listing (good realtor), bid more than the asking, with NO inspections. There was a competitive bid that had the standard termite inspection, so they give it to us, all for a $ 35 termite inspection.

    Good luck – but don’t get sucked up into a nightmare. Start small, and one thing at a time!

  3. Reply
    April 30, 2011 at 2:27 am

    You would have to obtain personal loans for tax liens, you can’t get a mortgage with no title.

    You would purchases unforclosed homes just like any other, although most would be short sales. Obtaining a mortgage for a short sale is just like any other mortgage, no special requirements are on the buyer.

  4. Reply
    Lauren F
    April 30, 2011 at 3:07 am

    If you yourself own a piece of property that has some equity, you might be able to get a home equity line of credit and use that equity line to finance your purchase of tax liens and foreclosures. Just be aware that if you cannot make payments or pay off the HELOC line, the bank can take the property away from you that had the equity.

    That’s the only way I can think of to do it with a real estate loan.

    Otherwise, you could get private investors and set up a REIT (real estate investment trust) but those tend to be speculative investments and require much higher interest rates.

  5. Reply
    April 30, 2011 at 3:12 am

    Are you planning to refinance your home to purchase these investment instruments? This is the only way you will be able to get funds to purchase these investment instruments.

    To purchase tax liens, you must contact the county in which the property is located. they are the ones that would be able to give you information as to the requirements to purchase these tax liens from their county.

    If you are planning to purchase foreclosure properties this must be done before the property is actually in foreclosure or when the lender decide to place the property in foreclosure, you would need to contact the person living in the property who is the current owner.

    You would have to make some type of arrangement with this person to purchase their equity, give them a little money to move as well as bring the mortgage note current. This is called purchasing foreclosures before the trustee sale or foreclosure sale.

    If you are at a foreclosure auction, the word foreclosure is a misnomer as the property has completed the foreclosure procedure. This property is now called bank held Real Estate On hand (REO)

    Before you start on your investment in foreclosures and tax liens, I suggest you go to your local book store and purchase several books on the purchase, rehab and resale of foreclosures and REO properties. You might also purchase on concerning county tax liens.

    These books would give you a great bit of knowledge about the investing in these instruments. Some might offer sources of investment money to purchase these instruments and how to go about purchasing foreclosures from individuals.

    Citi Bank nor any other bank will lend you money to purchase these properties or instruments unless you are refinancing properties for this purpose.

    Buying tax liens is like purchasing stock, you either have the money, borrow from friends or relatives. You can not walk into a bank and say I want to borrow money to invest in stocks, unless you have an account there and will collateralize your savings against the amount you would want to borrower.

    I hope this has been of some benefit to you, good luck.

    “FIGHT ON”

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