I was told by an investor friend that when a bank forecloses, the property must be auctioned at the courthouse. Is this true? Does the mortgage holder have any other options? The reason I am asking is in this case the mortgage holder is an individual and is willing to make a deal for the property with me. Also is it possible for the mortgage holder, once he owns the property, to erase any liens or back taxes owed?
I was told by an investor friend that when a bank forecloses, the property must be auctioned at the courthouse.
Is this true?
Not necessarily that it must be held at the courthouse. Following the requirements of PUBLIC NOTICE as called for by the statues of your state it may be held anywhere in the county in which it is located…normally this is the local courthouse as it is a known address to everyone in the county.
Does the mortgage holder have any other options?
In simple terms, yes.
The reason I am asking is in this case the mortgage holder is an individual and is willing to make a deal for the property with me.
The problem I see here is that the mortgagee does not own the property and cannot sell it other than through forclosure without the consent of the mortgagor.
Once foreclosed upon he the mortgagee can do whatever it wishes with the property.
Also is it possible for the mortgage holder, once he owns the property, to erase any liens or back taxes owed?
Any junior liens will be wiped from title. Taxes WILL NOT. IRS will have automatic right of redemption for 120 days regardless of their position in chain of title.
This really depends on the county and state that the home is in. Most bigger states have the auction at the home, smaller populated areas tend to have it at the courthouse, but even then it varies.
Modified due to rules violation
Depending on the situation. If you are willing to buy the property right away just before it gets auctioned would be the best deal that you could have.
The mortgagee CANNOT sell you the property.
He does not own it.
Has no right of sale other than foreclosure.
The mortgagee can only sell you the note, secured, hopefully by a deed of trust, with a power of sale paragrah.
Only the mortgagor, owenr can legally sell you the property PRIOR to foreclosure.
AND, is so, you are taking ti subject to all liens and encumberances of record.
I think you may be confusing foreclosure with disposition. They are two separate processes.
The bank (or whoever) forecloses. They own the property. They can sell it, auction it, demolish it, whatever. It’s theirs. This process removes the mortgage from the property.
If there has been no completed foreclosure, then the bank has nothing to sell. Well, they can sell the note, but they cannot sell the property; they don’t own it. The bank may agree to a sale or short sale, but this it not the bank selling, simply the bank (who holds the mortgage) agreeing to the sale between the owner and buyer.
After foreclosure, if the new owner (bank or whoever) chooses to auction it, then you can purchase it from them at the courthouse or wheverver the auction is held. At this point, there are no encumberances - the owner is selling the property that was previously foreclosed, which would have removed the existing mortgage.
Sometimes the foreclosure and auction happen at, or close to, the same time. It’s still two processes, they just occur simultaneously. The sale (auction) cannot proceed if the foreclosure fails.
Taxes are statutory and cannot be “erased” by an owner, mortgagor or mortgagee. Only the taxing jurisdiction can “erase” back taxes. It may be possible that the taxes were paid (or negotiated) as part of the foreclosure proceeding and/or closing process.
Thanks for the clarification. :biggrin
We have seen in courts in California where mechanics liens can not be erase if the lender does a foreclosure.
Yes, some may survive the foreclosure…all depends on the Judge you get and the circumstances of the case.
And, having seen lots of things done…I can say that some should survive. People do odd things to try and prevent payment of debt.
We see it all the time on consumers will hire a shade tree lawyer in California to try and get 3 to 4 months rent free before they are force to move. We take care of the dead beats by filing a lawsuit in small claims court and when we jet a judgment we go after anything they have.