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Old 04-27-2011, 07:32 PM
 
Location: Kansas City North
5,100 posts, read 8,595,565 times
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Is there any rhyme or reason as to what amount the bank will bid at a foreclosure auction? The example I have is: house was purchased in 2007 with $348,650 mortgage (which was the only mortgage). House was sold at foreclosure auction in 2010 and the bank bid $305,000. I was always under the impression that the bank would bid the balance amount of the mortgage but obviously in this case it was much lower than the mortgage amount.
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Old 04-27-2011, 07:40 PM
 
Location: Richardson, TX
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Do you have mortgage insurance? Sometimes the required bid is 85% of the value which would be the unpaid balance plus advances ( such as attorney's fees ) plus unpaid interest.
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Old 04-27-2011, 08:21 PM
 
Location: North Carolina
572 posts, read 1,482,221 times
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Quote:
Originally Posted by Okey Dokie View Post
Is there any rhyme or reason as to what amount the bank will bid at a foreclosure auction? The example I have is: house was purchased in 2007 with $348,650 mortgage (which was the only mortgage). House was sold at foreclosure auction in 2010 and the bank bid $305,000. I was always under the impression that the bank would bid the balance amount of the mortgage but obviously in this case it was much lower than the mortgage amount.

The bank bids the mortgage balance at the time of foreclosure, not the amount of the original loan. If someone bids a dollar over the amount owed then they get the house, the bank gets their principal back and everybody is happy.
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Old 04-27-2011, 08:41 PM
 
Location: Kansas City North
5,100 posts, read 8,595,565 times
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Quote:
Originally Posted by Time2Travel View Post
The bank bids the mortgage balance at the time of foreclosure, not the amount of the original loan. If someone bids a dollar over the amount owed then they get the house, the bank gets their principal back and everybody is happy.
That is what I always thought, but in this case the bank bid much less than what the mortgage balance would have been. Even if they had made all their payments, after 3 years the balance still would have been much more than the $305,000 the bank bid.
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Old 04-27-2011, 08:44 PM
 
Location: Just south of Denver since 1989
11,488 posts, read 31,115,882 times
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In Colorado, the bank must bid the balance due or Fair Market Value. There is a theory that if the bank bids FMV, maybe someone will slightly outbid them and the bank would have to take it back.
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Old 04-28-2011, 11:26 AM
 
Location: Boise, ID
8,047 posts, read 25,792,495 times
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In my area, there doesn't seem to be any reason behind the bids set.

I have seen mortgages with a balance of $250k and a market value of $125k go up for $275k bid price

I have also seen mortgages with a balance of $250k and a market value of $125k go up for $70k bid price.

My boss has been buying some good deals at auctions this year, fixing them up and reselling them, so he has me watching these pretty closely every week, and if there is a pattern, it is beyond me.
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Old 05-01-2011, 10:43 AM
 
Location: Denver
1,788 posts, read 2,161,006 times
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My problem with auctions are:

You can't tour the inside of the house.

You can't get an inspection.

There may be liens or other title issues.

I would want to be an experienced local who can afford risks.
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