The foreclosure process differs from state to state, it might even differ withing the state. I can speak for foreclosure process in Southern California: When owners get behind enough on their house payment to make their lender nervous, lenders have a right to file a NOD (Notice of Default). Once NOD is filed, owner typically has 90 days to bring loan current. If owner fails to do so by day 90, lender then has a right to post a Notice of Sale on the property. Once posted, owner than has minimum of 21 days to pay off loan and penalties in full. If owner fails to do so by day 21, or later date otherwise posted, property goes to sale on the courthouse steps. The bank then ussually acquires the property at trustee's sale. The Bank is now the Owner of the property, and now it becomes Seller. If you don't have a Realtor who can assist you, contact the listing agent if the property is listed for sale. Listing agent might have disclosures, or a copy of previous property inspection if anybody else was interested in the property and already had the inspection done. I strongly suggest professional home inspection if one wasn't done recently - it will be money well spent. Depending on the size of the property, the inspection should not cost more than a few hundred dollars, unless you need certain expert's opinion... As far as septic - the seller - (bank in REO case) should pay for septic to be pumped and certified, and for LGS Industry Standard Report ((natural hazard zone disclosure). In case the property isn't listed, contact a Realtor who you might know, and they will be able to research the property's profile, find out who the owner of record is and assist you with the purchase. You probably already know what the property is worth if you live nearby, but again it might be good for you to contact a Realtor - you don't want to offer more than that property is worth in this declining market. You don't have to have the inspection done before you make an offer on the property. You have 17 days to get your inspection done after your offer is accepted, and if you discover defects on the property that are not acceptable, you than have a right to cancel the contract and get your deposit back. As far as financing options, FHA will only finance property with certain minimum standards. If you're considering purchasing property as an investment property, conventional loan might be the only way to go. In this declining market most lenders will only do conventional loan with 15% down or higher on non-owner occupied property.
Hope this helps. Good Luck!!!