2nd Is Forclosing. Auction?
Need some quick education. Always been involved when 1st is foreclosing but not 2nd. What happens at the auction? I'm trying to think it through to add "meat" to my proposal.
1st balance: $137,000
2nd: $69,000
3rd: $35,000
I've spoken to all lenders and the 1st is very aggressive at bidding at the auction. Correct me if I'm wrong but the 2nd would have to bid at least $206K to cover their interests and compete against the 1st correct? :-?
Or would the 1st have to bid that high to cover the 2nd since the 2nd is the one foreclosing?
My offer is around $144K. I offering the 1st in full because they won't budge and 7% of the other balances.
Can someone give me some quick education on the typical scenario when the 2nd forecloses?
Thanks a bunch--Jim
Hi, Jim. What's the place worth in it's as-is condition? As always, this is just about the most important number to know in the scenario....
The second is seeking to foreclose the interest of their mortgagor... and all junior liens... taking title to the property subject to all senior liens.
For the second to be made whole, their bid would have to be enough to cover all senior liens, and their own costs.
By controlling their bid, they can accept any amount they choose.
If they think that they can get more than
$5,000 (your offer) by bidding at sale... they probably will.
For the third to protect their interest, they would have to bid up to ($137K + $69K )plus whatever they would accept, plus sheriff's sale costs.
So, what's the place worth?
SSP-
Good to talk with you again. The house is around $220K. Tax rolls has it at $218K. BPO brought $184K. I met with the realtor and pleaded with her to keep the appraisal low.
The sellers husband died in 3/04 with a surprise heat attack. No life insurance!!!! Seller has 2 kids in college. The son has decided not to go to college this fall due to the death of his Dad.
Too this house had foundation repairs done by a company in town that guarantees their work. They are the oldest foundation repair company in town. The 2nd lender said they would give an allowance of around $15K on the foundation issue.
What do you think? Jim
Without knowing all the facts:
If I were hired by the second mortgagee to review this Proposal, I would reject $5,000 as payment in full.
If I were the third, I would accept $5,000
If I were you, I'd really hammer the BPO with your own, supported opinion of value.
I spend most of my consulting hours refuting BPOs' and appraisals' conclusions for Clients who want their initial proposal to be all it can be, or who are appealing a rejection.
SSP:
Yep, i see where you're coming from. I'll let you know how things turn out.
THanks again--Jim :-D