I have a listing that will go into foreclosure in about two months. The price is right, but the market keeps heading south. Anyways, I'm curious to know if lenders are willing to bail out default owners.

Here's some lenders that can probably help you. It's a tough market to shake a monkey off of someone's back so that another can have the monkey I hope that your client can be helped... please keep us posted...

IPO
http://www.oomc.com
http://www.SRIwholesalemortgage.com
http://www.QualityHomeLoans.com

Just to add to what PL has said, be aware that foreclosure bail out loans are prolly going to be hard money & limited to 70% LTV.

Most of the time if there is 30% equity in the property the owner could have refi'd or sold by now.

Any chance the owner can work something out w/the lender?

There is 30 percent equity in the property(bought for 235, appraised at 325k but the appraisal was a while back. Should still be no less than 300k). Anyways, my preferred LO is going to meet with seller but I already know their credit score is in hell, and I'm beginning to feel bad that they will lose their home.

As stated 70% LTV will be as high as any lender will go on a property that has had an NOD recorded.

Beyond just whether you can get the homeowners a refi is whether a refi will really help them. The rates on an out of foreclosure refi will be very ugly, probably double digit. Why are they in default? Are they in a house that they really can't afford? Any refi must be in concert with a solid plan to get them back on track - not to just something to delay the inevitable.

In my area values are falling so fast that an appraisal more than 30 days old is questionable.

I must agree w/SD on this one. Unless the sellers have significant equity & a realistic plan to get back on track the refi is only going to make things harder for them. If they can't handle the current payment how can they handle a higher one?

Certainly there are exceptions an illness, job loss, etc could get a borrower behind.

If it's truly hopeless a deed in lieu may be a better option for all concerned. Assuming acourse the borrower & lender have not been able to work the whole thing out.