Foreclosures on home loans have trended downward in the city during the last year, according to Foreclosures.com, a company that provides foreclosure lists for investors.
While foreclosures are the ugly side of home ownership that everyone hopes to avoid, buying a foreclosure can be a lucrative investment.
There were 1,960 foreclosures in New York City during the second quarter of 2004, a 17 percent drop from 2,354 during the second quarter of 2003, the company said.
Foreclosures also have been trending down in Chicago, Los Angeles, and San Francisco, but not as dramatically as in New York. New York had a higher rate of foreclosures at the beginning of 2003 due to the after-effects of Sept. 11, foreclosure analysts say.
There are many places to look for foreclosed properties. The federal government forecloses on hundreds of thousands of homes each year. Banks and financial institutions also take back homes that they have loaned funds against.
Banks refer to the properties they retrieve as REOs, for “real estate owned.” Within larger banks, there are REO departments devoted to the resale of these properties. Many smaller banks do not have REO departments, but do have a person who handles the disposition of foreclosed properties.
Finding a foreclosure before anyone else – or a “pre-foreclosure” that allows you to be the only person negotiating with a motivated seller – can give you an additional advantage.
In the case of bank REOs, becoming familiar with local contacts of REO departments can help. You can tell them the type of home you are looking for and the area. If you check back regularly, you may obtain information on homes before they are added to public databases.
Newspapers can be another source of information about pre-foreclosures. Check “for sale by owner” and “homes for rent” ads. Sometimes, these represent the last efforts of homeowners who are so strapped that they can’t afford to lose money toward a real estate commission.
Finally, public court documents give you information about homes 30 to 180 days prior to foreclosure, according to a story by Scripps Howard News Service. In every state, a legal notice must be filed before a foreclosure can be finalized.
The length of time between the initial legal action and the final resolution varies nationwide, but the procedure is the same. In most states, a “forcible detainer” is filed. It may indicate the property address, name of the homeowner and amount owed. This action is filed prior to the actual foreclosure and gives you enough information to contact the homeowner directly.