Navigating the Foreclosure Lien Holder Maze

Liens are a charge or claim against a person's property, made to enforce the payment. Broken down into groups based on whether they are voluntary or involuntary, lien holders can initiate the foreclosure process to get paid what’s owed them. When a property goes on sale as a result of bank foreclosure, lien holders, frequently bid poorly, short sell, and leave money on the table. A foreclosure home short sale can specifically state that any proceeds cover what you owe without additional liens.

Unfortunately, lenders who are attempting collect on a loan on homes in foreclosure are not necessarily cooperative when contacted by potential investors. Property information on a foreclosed home for sale is usually a matter of public record. Ergo, you can usually find the information you need at the local county courthouse or county record department. There you will find documents such as financial statements, as well as a detailed description of the property and its condition.

Lenders currently have an abundance of foreclosed real estate owned properties (known as REOs), which should give you some leverage. Lenders may be willing to take a “short” payoff, meaning they will accept less than is owed. In addition to negotiating with the mortgage holder, you will also want to contact any lienholders in order to negotiate a price for the foreclosure home for sale.