Pre-foreclosure script: what to say to an owner behind on payments

An owner behind on the mortgage has heard from a lot of people by the time they hear from you: the servicer, a lawyer, other investors, maybe a company promising to save the house for a fee. Here's a script that sounds like none of them. This is general information, not legal or tax advice. Use a real estate attorney in your state before you sign anything.

Opening

You: "Hi, is this Pat? This is Sam. I buy houses here in town, and I'm reaching out about your place on Maple Street. I'm not calling to pressure you. Is now an OK time for a couple of questions?"

If they called you from a letter: "Thanks for calling. What's going on with the house?"

Understand where they are

• "What's going on with the house right now?"
• "Has the lender set a sale date?" (Confirm it later in the county records.)
• "Have you talked to them about a modification or a payment plan?"
• "Do you want to keep the house, if there were a way?"

That last question matters. If they want to stay and can afford to, the right answer may be a loan modification or reinstatement, not you. Tell them so.

Lay out the options, honestly

You: "Here's how I see it. You've got a few options. You can try to catch up or modify the loan with the lender. You can list it, if there's enough time and equity. Or you can sell it to someone like me, as-is, fast. I'll tell you which one I think gets you the most, even if it's not me."

That line is why sellers call you back.

If selling to you fits

You: "If it makes sense to sell to me, here's what that looks like: I'd see the house this week, give you a written offer, and we'd close before the sale date. If you owe close to what it's worth, I might be able to take over the payments instead of paying it off. Either way, I'd want you to have an attorney look at it."

What never to say

• "I can stop the foreclosure." You can't promise that, and in several states, offering to stop or delay a foreclosure makes you a regulated foreclosure consultant. California is strict about it.
• Anything that asks for money up front. Ever.
• "Sign the deed now and you can stay as a renter." Leaseback deals with owners in foreclosure are a known scam pattern and illegal in some states. Don't go near it.

Close with a next step

You: "Can I come see the house Thursday? I'll have something in writing for you by Friday, and you can take it to whoever you like."

Follow up for months

Most owners don't decide on the first call. Across 99 counties, about 3 of every 100 owners with a foreclosure filed sold off-market in the first 3 months, and about 13 by month 12. The investor still calling in month six gets the deal. See when foreclosure owners sell in your county.