Trustee in Pre-Foreclosure: What Is It?

There are several steps and several agents involved in a typical foreclosure process. A home, for example, moves from pre-foreclosure to foreclosure after the homeowner defaults on payments and does not pay the lender by the proper deadline. Involved in this process are agents called trustees, and they work with the bank to help the properties be sold at auction.

When a house moves into pre-foreclosure – due to the inability of the homeowner to pay the mortgage on time – a trustee is appointed over the property. This information can be found in the Notice of Trustee's Sale supplied to the public when the trustee is appointed (although this may vary depending on the state). Investors use this contact information to solicit info about the property for the purposes of buying it for ownership or investing.

There is a limited amount of information a trustee is legally allowed to give you about a property. But, if you want to get ahead of the curve and purchase a discounted property before it goes to a foreclosure auction, talking to the trustee is necessary. This is your opportunity to make an offer on the home before it goes through foreclosure. Lenders sometimes prefer these because a foreclosure nets less money for the lender, typically, than short sales, pre-foreclosure sales, and direct market value sales.

Talk to a real estate broker to see if or when you should contact a trustee regarding a particular property for purchase.