Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Many mistakes were made by my parents to get them in the situation they are currently in. There is too much to explain so I will just lay out the relevant details to the upcoming lien auction.
When my parents wanted to buy a home, for various reasons, they could not put the home or mortgage in their name. They came to a verbal arrangement with a relative to put the home and loan in his name while my parents make all payments as if they owned the home. Relations with this relative went very sour. My parents decided they didn't want to deal with the relative or a court case to get the property. They decided to stop making all payments, live in the home for free as long as possible, and then walk away.
Mortgage, taxes, insurance, and two different home owner association (HOA) payments have not been made for 12 months. Approximately $25,000 total saved. More than that is owed due to late fees and various other charges incurred by not paying.
One of the HOA companies placed a lien on the property and will be selling it at public auction next week.
The auctioning HOA is owed approximately $8,000.
Market value of the property is approximately $265,000.
The one and only mortgage on the property is approximately $220,000.
Property taxes owed are approximately $4,000.
The second HOA is owed approximately $1,000.
My question is, what happens if I bid and win the auction? I assume I will then need to clear out the other debts before becoming the owner, right? I can pay all debts in cash except the $220,000 owed to the current mortgage. I know I can easily qualify for a mortgage of that size, but is that even an option? Will I be able to get a standard mortgage to pay off the $220,000? Or will that need to be paid off in cash?
Finally, my parents would like to keep the house, but given the figures above, is it worth it?
In my area, 95% of auctions require cash at the sale. In fact, they won't even let you bid unless you have cash (or cash equivalent, such as money orders, cashier's check, etc) in hand. If you bid $.01 over what you proved you had, they double check you before accepting your bid.
However, the other 5% of the auctions we have do allow you to get a normal mortgage, as long as you can get it quickly after the auction.
But you said the HOA is the one auctioning the property, and that means they may not actually be auctioning the property, but rather the rights to be the lienholder on the HOA lien. That would be a very important thing to find out.
I realize they're your parents and all, but dont you think what they did to their generous relatives horrible? Defaulting was bad enough, but to live there for a year free is just plain evil. Like they were on a mission to totally destroy them. Are you really willing to risk your credit also? What if you 3 have a falling out? I dont know for sure, but I bet this also is on the line of being illegal. Loan companies dont like to loan money twice to the same deadbeats. And I know this post will make you mad, but imagine them NOT being your parents and what you'd think of strangers pulling this. I'd be really disapointed in my folks if they had pulled this stunt...
Many mistakes were made by my parents to get them in the situation they are currently in. There is too much to explain so I will just lay out the relevant details to the upcoming lien auction.
When my parents wanted to buy a home, for various reasons, they could not put the home or mortgage in their name. They came to a verbal arrangement with a relative to put the home and loan in his name while my parents make all payments as if they owned the home. Relations with this relative went very sour. My parents decided they didn't want to deal with the relative or a court case to get the property. They decided to stop making all payments, live in the home for free as long as possible, and then walk away.
Mortgage, taxes, insurance, and two different home owner association (HOA) payments have not been made for 12 months. Approximately $25,000 total saved. More than that is owed due to late fees and various other charges incurred by not paying.
One of the HOA companies placed a lien on the property and will be selling it at public auction next week.
The auctioning HOA is owed approximately $8,000.
Market value of the property is approximately $265,000.
The one and only mortgage on the property is approximately $220,000.
Property taxes owed are approximately $4,000.
The second HOA is owed approximately $1,000.
My question is, what happens if I bid and win the auction? I assume I will then need to clear out the other debts before becoming the owner, right? I can pay all debts in cash except the $220,000 owed to the current mortgage. I know I can easily qualify for a mortgage of that size, but is that even an option? Will I be able to get a standard mortgage to pay off the $220,000? Or will that need to be paid off in cash?
Finally, my parents would like to keep the house, but given the figures above, is it worth it?
If those numbers are correct, I'd be worried about the current owners evicting your parents selling the house and paying off all the liens.
In my area, 95% of auctions require cash at the sale. In fact, they won't even let you bid unless you have cash (or cash equivalent, such as money orders, cashier's check, etc) in hand. If you bid $.01 over what you proved you had, they double check you before accepting your bid.
However, the other 5% of the auctions we have do allow you to get a normal mortgage, as long as you can get it quickly after the auction.
But you said the HOA is the one auctioning the property, and that means they may not actually be auctioning the property, but rather the rights to be the lienholder on the HOA lien. That would be a very important thing to find out.
A neighbor had his home go through the same process where the HOA auctioned off the property after 1 year of delinquency. He says the auction ended a couple thousand above the HOA debt, so right around $11,000.
Lets assume the same goes for my parents property and the auction ends under $15,000. I can pay that in cash on the spot. I assume I then have to clear all other liens and financial ties to the home outside of the auction, correct?
Basically, is it possible for me to win the auction for say $15,000, pay that in cash on the spot, then acquire a mortgage to pay of the current loan? Does it ever work that way, or are all debts paid in cash all the time?
I realize they're your parents and all, but dont you think what they did to their generous relatives horrible? Defaulting was bad enough, but to live there for a year free is just plain evil. Like they were on a mission to totally destroy them. Are you really willing to risk your credit also? What if you 3 have a falling out? I dont know for sure, but I bet this also is on the line of being illegal. Loan companies dont like to loan money twice to the same deadbeats. And I know this post will make you mad, but imagine them NOT being your parents and what you'd think of strangers pulling this. I'd be really disapointed in my folks if they had pulled this stunt...
As I said, a lot happened leading up to this situation that I didn't mention. The relative lost his job and intentionally maxed out all his credit cards with the intent to file bankruptcy. For over a year we desperately asked him to sign the house over and walk away. Eventually he became violent with my parents. Their home was the last thing worth anything in his name and he wanted to steal it away.
By not paying, my parents did not ruin his credit because it was already shot to hell.
If the first isn't foreclosing yet, you would still have to negotiate with the owner to buy it. Buying a junior lien at an auction gives you no rights except the right to collect on that lien. It does not give you the right to buy out the first against the owner's will, or anything else. So no, whether you have cash or have to get a mortgage is irrelevant if the owner won't sell to you. You'll have to wait until the 1st lender forecloses.
At least that is my understanding. I actually don't understand why a 2nd would ever foreclose, since I don't think anyone actually buys 2nd liens at auctions. Maybe someone else can address this and tell me I'm wrong and that there is a purpose.
As I said, a lot happened leading up to this situation that I didn't mention. The relative lost his job and intentionally maxed out all his credit cards with the intent to file bankruptcy. For over a year we desperately asked him to sign the house over and walk away. Eventually he became violent with my parents. Their home was the last thing worth anything in his name and he wanted to steal it away.
By not paying, my parents did not ruin his credit because it was already shot to hell.
You can't steal something that is yours. The house was in his name.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
And I know this post will make you mad, but imagine them NOT being your parents and what you'd think of strangers pulling this. I'd be really disapointed in my folks if they had pulled this stunt...
