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Buying a Washington DC Foreclosure!

A lot of investors and homebuyers ask me about buying a Washington DC foreclosure.  In this blog I will talk about the process a bank must go through to foreclose and where to search for them. 

First, you must understand that in Washington DC there are very few foreclosures on the market currently.  It has been over a year since banks have foreclosed on a property in Washington DC.  This is due to the robo signing issue(which was just resolved last week) and the mediation law that the DC council put in place in December 2011.  The mediation law forces banks to meet face to face with the borrower to prevent a Washington DC foreclosure.  In the second half of 2011 only 25 notices of default were issued by banks compared with over 1000 issued in 2010.  A notice of default (NOD) is the instrument used to initiate a foreclosure preceding in Washington DC.  This must be recorded in the land records.  Banks hire local attorneys to issue the NOD's.  These attorneys are then known as "substitute trustees". 

Once the substitute trustee has the ability to foreclose they list the property in the newspaper.  The property is usually listed in the Washington Post or the Washington Times. 

The trustee then hires an auction firm to complete the Washington DC foreclosure.  Some of the trustee's are listed below. 

Atlantic Law Group

Rosenberg and Associates

Friedman and MacFadyen

If you are looking to purchase a pre-foreclosure(which is not a short sale) then you would go to the auctioneers site.  One of the larger auction companies in the area is Alex Cooper

To search for Washington DC foreclosures you can go here.    On the right hand side under "Foreclosures" select "search foreclosures".  There are currently 41 properties listed as a Washington DC foreclosure. 

Fannie Mae lists all of their foreclosures through the Homepath site.  

Freddie Mac Washington DC foreclosures can be found through the Homesteps site.  

Washington DC HUD foreclosures are on this site.

Wells Fargo Washington DC foreclosures can be found at this location.  

Washington DC foreclosures owned by Bank of America are listed here.

Washington DC foreclosures owned by Ocwen/Altisource can be found on their Go Homing site.

I hope this information is helpful.  Soon you should be on your way to buying a Washington DC foreclosure.  If you need help with anything please let me know.  Thanks for reading.

4 Responses to "Buying a Washington DC Foreclosure!"

Brian wrote: Please comment on how feasible it is to finance a purchase of a foreclosure in DC. As I understand it, a bid at an auction ordinarily requires a substantial deposit, which must be followed up with full payment within a limited time period. Is there a general legal time period for completing a foreclosure bid in DC, or does it vary widely depending on the auction house or bank? Can a buyer expect 30 days before closing after winning a bid on a foreclosure?
Do some foreclosures allow inspections or viewings prior to auction day?
Thanks for any help you can provide with these questions.
Ben Puchalski wrote: Thanks for the comment Brian! When buying properties at auction you incur a lot of risk but the rewards are huge. It is not feasible to get financing unless you have access to the property(because a lender is going to want an appraisal to be done). You usually have to close on the property in 30 days. Auction properties do not allow for inspections also. Obviously if a foreclosure occurs and the property is taken back by the bank then you can do an inspection, get financing and close whenever you can. Most banks will allow 10 days for a general inspection. Let me know if I can answer any other questions. Hopefully this helps.
Brian wrote: Ben - I appreciate your prompt and helpful response, though a few details remain unclear to me. You say it is not feasible to get financing unless you have access to the property. Is it a hard rule that an auction never allows access to a property, or are there exceptions? If there were an exception, would accessibility noted in the announcement of the auction of a property or do you have to call the auctioneers to ask before the auction? Without such exceptions, it sounds like a buyer would need the full amount in cash - is that right?

You add that if a foreclosure occurs and the property is taken back by the bank then you can do an inspection. This seems to imply that auctions of foreclosures occur before a "foreclosure" :-)? Is that right? Or is it that the bank forecloses but does not take possession and submits the property to auction in cases of an auction?

Do banks advertise (on the MLS &/or newspaper) foreclosures for sale that are not sold through auction? In such cases, are you saying that bidders and their banks always have access to the property before closing? Can you give us any idea of what proportion of foreclosures go to auction vs. the proportion that is put on the market by a bank? Are there any general practices about which properties are handled which way? Are more expensive properties more likely to go to auction or to be sold by the bank?

Thanks for addressing all these details.
Ben Puchalski wrote: In a foreclosure auction you do not have access to the property. If you go and talk with the homeowner they may allow access. Rarely are you able to access a property prior to foreclosure unless you speak with the owner and they are agree to allow you access. Banks/auction co's/trustee's do not allow access. Right, most of the time the buyer pays cash.

The auction occurs before the actual foreclosure. The auction is the foreclosure. If no one buys the property at auction it becomes bank owned AKA REO(real estate owned).

Trustee's acting on behalf of banks are required to list the property in the newspaper. You can also find them on the trustee's website(see one's in blog). These properties are not advertised on the MLS. All properties go to auction. If they are not purchased by someone at auction they become bank owned. The majority of the properties that banks are foreclosing on have high loan to value ratio's so they usually get reverted back to the lien holder(the bank). If you look under the "sold" section on the Alex Cooper site you can get an idea of how many sell. Not many. Especially lately. Let me know if you have any questions. Trustee's should start foreclosing more now that the settlement has occurred. My bank owned inventory has been really low.

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