Posted by Chris (WI) on January 06, 2006 at 14:37:52:
You are basically right but you had better make darn sure you have done your homework and there are no other liens before the one you buy or any type of tax liens that make take priority over your lien. I did one deal like this last year in Illinois and made $40K at the auction. I lost the bidding competition and couldn’t have been happier.
???Auctions??? - Posted by Oscar IL
Posted by Oscar IL on January 06, 2006 at 12:49:42:
Am interested in purchasing a loan before the auction of a preforeclosure. So my question is, lets say for example I get lucky in purchasing a loan for ten thousand on a house worth hundred thousand before the auction. I then bid sixty thousand on my own loan at the auction when the other bidder only bid up to fifty five thousand. Does that mean the sixty thousand goes back to me since I bought the loan or how does that work. Thanks to all and any responses will gladly be appreciated.
Re: ???Auctions??? - Posted by Bill H
Posted by Bill H on January 06, 2006 at 22:35:59:
You as mortgagee are not allowed to profit from someone else’s financial distress.
Lets put it in perspective this way.
Property value is 100,000
Current first lien is 50,000
2nd trust deed is 25,000
You purchase the 1st lien for 10,000.
You may initiate foreclosure for the current lien amount of $50,000 as that is the amount owed. If you bid it up at the auction to 60,000 then the additional 10,000 would go to the 2nd lienholder.
You would be entitled as first lienholder to the face amount of your debt or 50,000, plus all your costs to conduct the sale, ie., title fees, attorney fees, publication fees, etc.
You have no onwership rights or interest in the property other than that as a lienholder and would not be entitled to any more than that amount regardless of how high you or someone else bids it up.
Good Luck,
Bill H
Re: ???Auctions??? - Posted by Kevin IL
Posted by Kevin IL on January 06, 2006 at 16:11:08:
If you bought the first mortgage and that is the foreclosing mortgage, then you could bid up to the full amount of the lien. If you are the high bidder and you own the mortgage, you’ll get the house back. You will not get any money. But you can now sell the house for whatever price you want.
If someone outbids you, then you will get all that money up to the value of your lien. Any additional money would go to jr liens or the homeowner.