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Investing in Foreclosures For Beginners by Lex Levinrad Copyright 2008 If you are thinking about investing in foreclosures there are some key points for you to consider before you begin investing. The first step for you to understand is how the foreclosure process works. The foreclosure process can be broken down into three key components. Pre-Foreclosure Foreclosure Auction REO Pre-foreclosure The first step in the foreclosure process is called pre-foreclosure. When a homeowner has not paid their mortgage for more than ninety days the bank that owns the mortgage on that property files what is called a “lis pendens” which means “suit pending” in Latin. A “lis pendens” is a written public notice that a lawsuit has been filed concerning real estate. This notice is filed in the county public records against a piece of property. This notice is also often easy guitar songs listed in the classified ad legal section of certain newspapers. Filing this public notice alerts any potential purchaser or lender that the title to this property is “clouded” or unclear. When a property has a “clouded” title then the title is not “free and clear” which makes the property less attractive to potential buyers or lenders. In reality, once a “lis pendens” is filed, a property cannot be sold or refinanced without the buyer being fully aware of the fact that the “lis pendens” has been filed. The only way to get rid of a “lis pendens” is through foreclosure which wipes out a “lis pendens”. Once a lis pendens has been filed the property is considered to be in pre-foreclosure. If you subscribe to a public database likeforeclosures.com, realtytrac.com and many other similar sites you can get access to the properties that are in pre-foreclosure.