Pre-Foreclosure

We are going to take you through one of our deals. This deal started out in pre-foreclosure. We found a property listed with a broker in our target area. We called on the sign and spoke to the listing agent. She informed us that the owners were very motivated. We liked hearing that.

They were two months behind in their loan payments. The owners were in pre-foreclosure. The agent then told us a separation had occurred between the husband and wife. A divorce was imminent. We liked hearing that even better.

We began working with the owners. We pursued the property through the posting of the notice of default. We were unable to make a deal. We went to the foreclosure sale on the courthouse steps.

We felt the price at which the lender made the credit bid was too high. So did the other investors at the foreclosure sale. No one else bid. The lender had no alternative but to take the property back.

While real estate lenders are professional sellers, sometimes their own bureaucracy gets in the way of them making an effective deal. We did wind up finally making a deal with the lender after the property became an REO. But we are getting ahead of ourselves. First things first.

Working with the Owner The first thing we get from the owner in pre-foreclosure is an owner authorization to lender for release of borrower information. We will show you the actual authorization form we use. We will provide blank spaces rather than names in this and the other forms so you can use the forms in your own deals.

We want to speak to the lender directly. This establishes a contact between the lender and us. Usually there is one person in the REO department who is assigned to a particular property. If not,we recommend you ask to speak with the same person every time. We didnt realize how important this contact would be until much later.

OWNER AUTHORIZATION TO LENDER FOR RELEASE OF BORROWER INFORMATION

Date:

To Whom It May Concern:

I (We), (Owners Name(s)) do authorize the release of my (our) loan information, loan # for the mutual benefit of all parties to (Investor) and/or

(Investor). Sincerely,

(Borrowers Name(s))

The second thing we get from the owner in pre-foreclosure is an owner authorization to investor for property access. We want to be able to get into the property without having to wait for the agent or owner to meet us. In this case, as with many foreclosures, the owners had moved out of the property.

OWNER AUTHORIZATION TO INVESTOR FOR PROPERTY ACCESS

Date:

To Whom It May Concern:

I (We),

do authorize the

(Owners Name(s)) (Investor) and/or

(Investor) to access my (our)

property at .

I (We) have given this authorization to so

they may show prospective partners and/or investors the property in order to complete funding of our sale.

I (We) have given special instructions on

how to gain entrance to the property. This authorization for access to

my (our) property to and/or

begins today and extends through (Date).

Signed

(Owner)

(Owner)

We next present the owner a letter of intent to purchase. We are getting our initial agreement with the owner down on paper. This gives us a written basis of understanding on how the deal will proceed. Again, we give you our actual letter of intent to purchase from this deal.