Help! Two Banks Are Foreclosing On One Property Tomorrow!
Both the first and the second lien-holding banks are foreclosing on the same property at tomorrow morning's auction. We want this property, as the first is significantly less than the second. What will happen in this situation? Certainly, in normal situations, all junior liens are wiped out (except, of course, tax liens, etc.) But what if both lien-holders sell the same property at the same auction on the same day? I'm biting my nails....
Can anyone help with this? Thx!
Not 100% sure, but if the first is less than second, it's very likely that second will buy out the first at the auction.
The first is significantly less than the second.
Well, the first thing that comes to mind is, if they're foreclosing today, you started on it yesterday, you ain't got a snowball's chance of doing ANYTHING with it.
Why not? We did our title search, we know the order of the liens, and how much to make our check out for.
Just like any other auction here, you don't find out what properties will be appearing until 2:30 the afternoon before the auction. We always look, and if anything seems promising, we get an O & E done so we know if our favorites are clean or further encumbered.
We got one two weeks ago at auction based on this same research, and paid $22,000 for it - its worth $260,000. The owner still has about 45 days to file an intent to redeem, and about 60 days to actually redeem.
Both of these homeowners, of course, we had mailed multiple letters to weeks back.
If the Roaring Fork Valley, where you are, is still as hot as it was a few years back when I was there and you've done the research, perhaps you should just buy both, cover your bases...?
But now it's tomorrow, and the sale is over. Tell us what happened? I for one like to hear about what happened in situations I'll probably never encounter, just because it's interesting. Seriously.
Yep, the sale passed, and we passed on it. It actually wasn't in the RF Valley.
The home was worth about $160-165. The first was in it for only $20K, the second for $126K.
I don't know if this means anything or not, but the actual number and order of the auction had the first selling that house just two slots before the second was selling it. We figured that the second would, in fact, be wiped out, but that since they still did have an interest in the property, they could either bid on it there, or redeem by paying off the first after the auction, within the redemption period. And we figured they would do this, knowing how much they were in for, and how little the first was at.
Were we wrong to pass on this? Would the second have vanished into thin air, or would they, in fact, still have an interest in that property for the 75 days that the redemption period is here in Colorado?
MIght have been worth a shot, the worst that could have happened is you got the interest rate on the Mortgage if they redeemed for the time up to the redemption. Seems unlikely that they wouldn't redeem, but occasionally they mess up. The significance of the order was likely that the 2nd got notified that the 1st was foreclosing, so they wanted to get in line next to assure their position, and possibly even discourage investors from messing with it.