Sale Day Question
Can the bank, under any circumstance, ever accept a bid that is less than what is owed on the property? Or do they always start at the remaining loan balance plus expenses?
Thanks!
Can the bank, under any circumstance, ever accept a bid that is less than what is owed on the property? Or do they always start at the remaining loan balance plus expenses?
Thanks!
Not from the present note holder as I understand their policies. From a new buyer yes. That's what short sales are about.
I was at a foreclosure sale the other day, expecting the min bid to be 88k - since that is what was on record. However, min bid was 65k - how? - I don't know.
Realize that banks will sometimes come in lower than what is owed for many reasons:
just to dump it
appraisal came in too low
willing to take a loss and file a deficiency judgement against former owner (not you)
Usually, a lower bid is to your advantage. go for it!
jllaco:
no, no. let me clear things up for you. remember that the amount set forth in the judgment simply entitles the bank to collect up to the amount shown (which includes the principal owed, accured interest, attorneys fees, court costs, etc). The purpose of the court sale is for the bank to execute on that judgment (a/k/a collect their money). Generally, the property is sold at the courthouse steps to the "highest bidder for cash". This may or may not be the bank and the highest bid may or may not be more than the amount of the judgment. If the property is worth more than the judgment amount, the property will usually be purchased by a third party (i.e. an investor like u or me) and the extra proceeds (in excess of the judgment) is remitted to the borrower/defendant (assuming no other mortgages, liens, etc exist). If the bank is the highest bidder, they take the property and it becomes an REO (real estate owned) which is a liability on their balance sheet. If the property is sold for less than the amount of the judgment, the bank can pursue a deficiency action against the borrower for the difference. Hope this clarifies the process for you.
Jorge,
Excellent clarification!
[addsig]