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A notice of lis pendens signifies that the foreclosure process has begun on a house, as the owners either are behind on the mortgage payments, or have a tax lien that requires that the home be sold to pay off the money owed. The lender typically files this notice, and then the county recorder usually attaches it to the house title, making its status visible to all since this is public information. What a lis pendens foreclosure means to homebuyers is that they may have the opportunity to buy the home at a low price. In fact, many investors look for lis pendens foreclosures specifically, as it is their goal to purchase at a low price, and then resell it for more money in the future. On the other hand, a lis pendens foreclosure notice gives the current homeowners a chance to stop the foreclosure if they are not ready to lose their house, as this is only the first step in a long process.
When homeowners are past due on mortgage payments, the lender often contacts them to try to the debt as soon as possible. If the homeowners do not respond, or have no way of making payments, the lender typically files a notice of lis pendens, officially starting the foreclosure process. Since this is usually affixed to the title by the county recorder, it can prevent the owners from trying to refinance the loan, or selling the home without first checking with the lender.
Of course, the homeowners can typically still stop the lis pendens foreclosure, as it could be months or even years before the home goes to auction. One of the most common options is to work out a repayment plan with the lender, who will usually take the house off the foreclosure market once they are assured that they will get their money from the owners. It is also often possible for the owners to sell the house with the intention of giving the proceeds to the lender, although of course this requires the home's current occupants to move. Those who cannot afford to either move or start making mortgage payments can usually at least delay the lis pendens foreclosure by declaring bankruptcy, though this fix is only temporary.
Many investors can benefit from a lis pendens foreclosure since it is the first sign that a home is on the market for little money. Such investors are constantly looking for properties that they can purchase, fix up, and then sell for more than what they paid, so a notice of lis pendens may be a good thing. Of course, since homeowners can still save their house in this beginning stage of foreclosure, investors may need to act fast when showing their interest in the property.
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