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Old 11-18-2012, 08:16 AM
Location: Cape Coral, FL
154 posts, read 317,271 times
Reputation: 132


You may find some bank properties on the MLS but a lot of foreclosures are never advertised there. Once we foreclosed on a property we would often fix it up a bit before putting it on the market so it might be quite a time delay between foreclosure and offering the property for sale. If I were looking for a bank foreclosure I would contact the banks directly to see if they had any properties that were on their books but not yet offered for sale--that's were you would probably get your best deals.
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Old 11-23-2012, 07:47 PM
14 posts, read 22,763 times
Reputation: 27
Originally Posted by nhkev View Post
stay away from buying a foreclosure. from an auction it is not meant for a beginner or novice you have much more chance of making a drastic mistake as opposed to getting a great deal. The pros are out there watching the good properties and have deep pockets and will always outbid you, the ones that aren't being bid up there is a reason for it. 3 yrs ago this would have been a good way to get a great deal but those days are long gone.

I'm going to give you an example to hopefully scare you away. A couple had it in their mind they would be able to pick up a steal at a foreclosure auction. They found an upcoming auction that a lender was foreclosing on a house that would normally sell for $200k. They went and bid $65k and were the winning bidder they were hopping up and down celebrating their great deal. Luckily for them an investor tapped them on the shoulder and said "you realize you just bid on a property where the 2nd mortgage was what was being foreclosed and the house you just bid on has a 1st mortgage for $250k that will still be a lien on the property. The couple was shocked and asked what they could do? the investor said "lose your deposit".

there was another person who came on this forum because they had bid on a property to find there was a IRS tax lien again in the multi hundred thousand range but she didn't realize it untill after she paid for the whole property.

there could be chinese drywall issues or severe mold problems.

I monitor foreclosure auctions and 95% of the time the properties are being auctioned off "OVER" their assessed price. Just stay away.

you can however buy a REO property which means the bank foreclosed and when it went to auction they were the highest bidder. you can use a loan to buy these, you can do inspections, your lender will do a title search to ensure it will be an insurable title. just use the MLS and you should see it say "lender owned"
Is this even possible? The 2nd mortgage foreclosing on the house when there is still a 1st mortgage? Shouldn't the title of the house be with the 1st mortgage? And even if it was the 1st mortgage foreclosing on the house, the 2nd mortgage will not be able to go after the house because the 1st mortgage would have already taken them off the title. They can only go after the person who took out the loan and not the new owner of the house, right?
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Old 11-23-2012, 08:16 PM
Location: Cape Coral, FL
154 posts, read 317,271 times
Reputation: 132
The second mortgage holder can foreclose on the property if the second mortgage is in default, however, the second mortgage holder will get the property subject to the first mortgage. IOW, they would have to pay off the first mortgage in order to take possession of the property.

If the first mortgage holder forecloses the property, before the second morgtage holder does, then the first mortgage holder wipes out the second mortgage holder's lien. The second mortgage holder can still go after the debtors but has no right to the property as collateral. In this case, the first mortgage holder could also go after the borrowers if there was a deficiency. Nobody can go after the new owner of the house unless he goes in default on his new mortgage.

Second mortgages are not a good investment for the lender unless their is substantial equity in the property.
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Old 11-24-2012, 10:19 AM
14 posts, read 22,763 times
Reputation: 27
So for the above example, the 2nd mortgage foreclosed without the 1st mortgage knowing about it, that's why they were able to auction off the house while still owing the 1st mortgage? I would think the 1st mortgage would do what's in their best interest and foreclosed before the 2nd mortgage can in order to protect themselves so when the bidders bid on the house, everything would have already been taken care off.

Maybe I'm just not getting it or the example just looks off. Oh well, good luck to everyone.
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Old 11-24-2012, 12:07 PM
Location: Cape Coral, FL
154 posts, read 317,271 times
Reputation: 132
The only way a second mortgage holder could auction off the house would be if he paid off the first lien. If the first lien is $1,000,000 and the send lien is $50, the second lien holder couldn't foreclose on the property and put it up for auction without paying off the $1,000,000 first lien.

The first lien holder doesn't care how many subsequent liens are on the property since he will always have to be paid off first before the ownership of the house can be transferred.
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Old 11-25-2012, 09:08 AM
4 posts, read 4,911 times
Reputation: 10
I concur that REO is the way to go. Short Sales take incredible patience and often lead to disappointment, plus many of those homes will end up as REO listed at a lower price than the Short Sales price. The only real advantage to a Short Sale is that the property usually isn't stripped. On the other hand if the home is 10 or more years old you may want new appliances and fixtures anyway. Auctions are rigged against the "casual" buyer.

When buying MLS listed REO, even though sold "as-is", you have the opportunity to conduct an inspection and back out if the inspection uncovers major problems that you don't want to tackle. We purchased an REO property with a very clear understanding of what was needed to make it the home we wanted and have no regrets.

As mentioned earlier, contacting the bank directly for a list of REO properties is another way to go, but I haven't actually tried it so I can't comment on the effectiveness.
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