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Homeowners miss loan payments for a variety of reasons, and when
a homeowner has been delinquent on their payment for a number of
months the loan holder, most commonly a bank, will issue a Notice
of Default. The Notice tells the homeowner how much they owe in
missed payments plus how much they owe in attorney fees and other
penalties. The Notice also gives the homeowner a time period to
be able to pay all that is owed and bring the loan back to good
standing. If the Oakland homeowner can't pay all that is owed, then the
bank has the right to insist that the homeowner vacate the
property and the bank can then put the property up for sale or
auction.

During this period of time between the Notice and the Oakland foreclosure
sale, often called the pre-foreclosure period, the homeowner has
the option to sell the property and to use the proceeds to pay
off the arrearage that is owed. This pre-foreclosure period is
also a time when a resourceful Oakland real estate investor has the best
opportunity to help the homeowner with their problem. However,
the homeowner who is in default and the investor have to find
each other.

Since the Notice of Default is a recorded document and is made
public, the investor can often view the Notice shortly after it
is recorded. In most states and counties the Recorder's office
makes the Notice public by posting it at the local courthouse or
by posting it on their internet website.

The investor will generally find the Notice on the Internet and
then contact the homeowner. Through a combination of letters,
post cards, phone calls, and home visits the investor introduces
himself or herself to the homeowner and suggests some courses of
action.

Often the investor can take over the property and the
responsibility for the loan by offering a reduced sales price or
by taking over the loan altogether. This allows the Oakland homeowner to
leave the property and the problems behind while the investor
deals with them. The advantage to the homeowner is that they can
avoid having a Oakland property foreclosure on their record, which would
damage their credit score and their chances to purchase property
in the future. In exchange the homeowner will generally
willingly give up a large part, even all, of the equity that they
had in the property.

Now the investor has an opportunity to make a profit if
sufficient equity has been left in the property for him to make
arrangements. For example, the investor may be able to pay off
the arrearage, fix up the property, and sell it for a profit.
That takes a fair amount of time and resources. The investor
could also pass the deal along to an investor who specializes in
fixing up properties and take a small but quick profit. Or the
investor could sell the property at an attractive discount before
the property goes to the foreclosure sale and make a profit
without putting much of his own money into the transaction.

If there is not sufficient equity in the property for the above
solutions to work, then the investor could negotiate with the
bank to reduce the outstanding loan balance in exchange for a
quick sale. That would save the bank from having to foreclose on
the property and having the property become part of the bank's
non-producing inventory for an uncomfortable period of time.
This solution gives the investor the necessary equity to be able
to make a profit.

There are numerous other scenarios, complications, and solutions,
but this article has highlighted several of the more typical and
common situations. In the transactions discussed here the
homeowner benefits by being able to escape a damaging Oakland foreclosure
and the Oakland real estate investor benefits by being able to make a
profit on their investment of time and resources.

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