Buying a Pre-Foreclosure Home - Lender Wants to Approve Me

Reader Question: I am buying a pre-foreclosure home. Countrywide has the mortgage and I already have my financing set up. Now they want to "approve me" to see if I am worthy of their business. Does this seen right to you? I am not getting a loan through them nor do I want to.

Yes, it's very common for lenders to review a buyer, as they are doing with you. A lot of investors who buy foreclosure homes on a regular basis complain about this very thing (lenders dragging their feet). When you buy a home in the pre-foreclosure status, the process can be delayed by several things.

The process varies from one state to another, based on the foreclosure laws in a particular state. A homeowner has certain rights before the bank can foreclose on the home, and thus there is a time frame associated with the process. In most cases, the homeowner has two to three months to get caught up on their missed payment (through reinstatement or repayment).

It all starts when the lender files the initial paperwork for a foreclosure proceeding, and it can be several weeks later before they actually foreclose on the property. And again, this process varies by state.

If you have your financing lined up, then you have an advantage. But it still won't change the fact that there are certain time-consuming steps the lender has to take before selling the property.

I just found a good Q&A thread over at Trulia.com on this very subject. You might want to check it out. It's worth reading, because it's relevant to your situation.

Related Article: The Basics of Buying a Home in Foreclosure

Hope that helps clear things up a bit. Good luck.