California Foreclosure question
I have a question about foreclosing on a 2nd when there is a 1st in place.
1. Default filed on HOA Lien (2nd) for $5000
2. TS sale held, no sale, REO to beneficiary (HOA)
3. Owner of record is now HOA (????)
4. Default filed on 1st TD
5. TS sale held, no sale, REO to beneficiary of 1st
Is the Trustee deed issued in step 5, subject to the $5000 owed to the HOA.
In other words Does the HOA get it's 5000 (plus interest?) out of the proceeds of the TS on the 1st or does a "secured lien" for 5K still exist?
Thanks
Home Owners *****'n gets trustee's title subject to the 1st lien and its note, which now the HOA has to pay.
This sound like a typical luck of incompetence on the part of HOA. Managed by a boar of directors (who are often volunteers craving contractor's kickback), it doesn't surprise me that they manage to get zilch after all the trouble. But that's the fact. What's the question?
I received conflicting info like, overbid on 2nd would go to 1st, not owner.
overbids on 1st would go to HOA, not owner.
So, I am still not 100% clear on how HOA liens are foreclosed upon.
it doesn't meter if in second position is HOA or IKEA, second lean is always junior to first and will receive a bone only if the wining bid was higher then what's owned on the first. if the wining bid is equal or lower, 2nd trustee will receive nada, zilch, zero, nista, Etc.
I must confess my ignorance, I do not have a clue what is meant by HOA. It is not listed in the accepted list of shortcut words. Could you be so kind as to enlighten me. This just might start a whole new Age of Enlightenment
Lucius.and of course Voltaire we await.
Lets see if I can puzzle it out.
A Trustees sale was held on the second and that sale generated no overbids and the property was struck off to the Beneficiary. The Trustee then cut a Trustees Deed on Sale and the Beneficiary then went into title subject of course to the lst TD.
Then a Default filed on the lst and once again no overbid at the Trustees Sale and the property was then struck off to this Beneficiary. The Trustee then cut a Trustees Deed on Sale and the new Beneficiary is confirmed in title.
Of course the Second is now eliminated from title as is the (HOA???). There was no overage bid at this sale as the property was struck off to the Beneficiary of the lst TD.
Any overage bids on this sale would have course gone to the prior owner who was of course the (HOA???)
Now thats the procedure. Pretty Straight forward. The (HOA) should have serviced the first trust deed and not allowed a foreclosure if the property was worth it. I have a feeling that there was little if any value in the property.
Ah California, Maybe the Donner Party were lucky and did not know it. Wonder what sauce they used.
Lucius
HOA=Home Owners Association. Almost every subdivision in Florida has one.
Generally the HOA will wait until one of the big kahunas forecloses such as a 1st mtg or 2nd mtg if there is equity there. Then a bidder other than the lender buys the property. Once the property is in stronger hands the HOA files a lien on the property or makes threats to the new owner of record.
In this case, the HOA may have tried to force the banks hand thinking that they would advance the fees to the HOA and then foreclose. Since there was nothing there, there were no bidders at the auction. Most HOA's don't have the surplus cash to bring the 1st current and/or make mtg for an extend period of time.
A
cjmazur----------------
That is, in my view, a legal question, which suggests that you either consult an attorney or hit the law books to find an answer.
I am not an attorney. I can only give my opinion.
These days the homeowners association liens are probably all subordinate to the lenders' liens. So, the HOA is completely out of luck, in my opinion. They should have sold the property when they owned it and gotten a high enough price to pay them their dues plus some profit for the effort.
If there was not enough equity in the property to do that, they should not have even bothered to foreclose, I feel.
So, why does this question come up? What situation are you looking at?
Good Investing********Ron Starr*****************
The situation is, speculating in HOA liens and playing the appreciation game (not bad ROI on a approx. 4000 HOA lien).
Also, there have been several HOA liens that have had Sr. debt, and I just wanted to try and understand how it all works.
That's what I also asked/wanted to know: Nice story, but what is the question here ?
perhaps the unit was vacant and in decent shape. so they rent it when they aquired title until the 1st foreclosed. That way they get some money back....
my original question was understanding the precedence of HOA liens, and who gets pait what.
RonaldStarr asked what my play was, perhaps I should have answered privately.
There is a HOA lien coming up that 1200. That is a small enough amount to buy and see what happens. Learn buy doing. If I am successful, I'll post here.
In California.
I draw the assumption that in the original foreclosure of a second lien the HOA. There were no overage bids. No money for the Trustee to Dispurse. He cuts deed to the Home Owners Association. This deed is subject to the existing lst Trust Deed ahead of it.
Now the second part. A foreclosure from the prior Trust Deed from what I surmise, once again there was no overage bid.The Bene of the lst Trust Deed is now in ownership of the unit. any overage bids go to the party then in title at the moment of foreclosure sale.
I know what you are thinking. To monitor the foreclosures of Home Owner Association. As was pointed out, generaly, not too brite a bunch of buttons. Yes, by all means, But:
Watch the first that is ahead and usualy behind on payments. Watch the taxes, cause they are also behind. Also watch any prior IRS or Calif Franchise Tax liens that may be in position between the first and second. They are always a nasty shock. But, dont give up, there is a way to negotiate for their removal. You use the Offer In Compromise Form and attach thereto on submission a nice friendly letter explaining the circumstances of a foreclosure with no overage bidding. You might point out that the unit was flooded and they had canoe races in it prior to vacating. Come up with some kind of a story and attach a picture. No no not of you of the damaged apartment. Shoot it through a screen if necessary.
I hope this explains, good luck, you are about to meet some very challenged persons who participate in the management of the average Home Owners Association.
Cheers Lucius
Is there no such thing as a HOA in Cali? (referring to your first comment) Here in Texas there is a place on MLS for the dollar amount to be listed.
You nailed my strategy on the head.
Skiming the bid overages on the 1st, by being the "owner of record" via bidding $.01 over at the trustee sale of the HOA Lien.
Shouldn't this be in the forums instead of in the article section?
Yes, indeed.