Does lender always show for trustee's sale? - Posted by Kristine-CA

Posted by Jim V on March 25, 2003 at 16:00:03:


In CA, the auctioneer is, effectively, the lender. Sometimes junior lenders will not show up to protect their interest, though.

I mailed you a Kern county file that hopefully will answer some of your questions.

Does lender always show for trustee’s sale? - Posted by Kristine-CA

Posted by Kristine-CA on March 25, 2003 at 15:01:44:

For you foreclosure people out there: have you seen instances where the lender either 1) doesn’t show or 2) changes the minimum bid, etc.?

I am wondering how carefully lenders look at equity and FMV. What happens when they get stuck with a property with tax liens and/or damages that is in excess of what they can recoup if they are the only bidder and take it back? Or do corporate policies for the larger banks mandate that they just take back everything?

Thanks for any insights. Sincerely, Kristine

Re: Does lender always show for trustee’s sale? - Posted by rm

Posted by rm on March 26, 2003 at 17:02:18:

In my area, the lender doesn’t “show up.”

They simply send their bid for the amount owed to the sherriff prior to the sale.

Re: Does lender always show for trustee’s sale? - Posted by Georgia

Posted by Georgia on March 26, 2003 at 16:41:43:

I was at a foreslosure sale yesterday in Iowa. There were 2 people there, the law officer and me. The officer read the legal forms and noted the bank’s called in bid (Called in by an attorney 5 minutes prior to the auction). The officer gave me a lot of good information on what happens and how and some great contacts. I do plan to bid on some of these properties and hopefully I will be the only bidder present. Currently we purchase some of these properties from the bank after the foreclosure.

Re: Does lender always show for trustee’s sale? - Posted by David Krulac

Posted by David Krulac on March 25, 2003 at 17:02:22:

I’ve never seen a foreclosing lender not show up. Often times 2nd mortgage and lower don’t show up.

The attorney is there representing the lender, they have no negotiating power, no laditute etc. The attorney is told what to bid, which is almost always what is owed to the lender plus their costs.

The minimum bid does change, but usually upwards as additional costs are factored in at the last day. Usually the lender is out of town and the same attorney might be there representing multiple lenders on multiple properties.

At the last sale I went to, this month, only one property was bought by someone other than the lender.
This was not for lack of trying or for lack of bidders. 95% of the time there is little equity, zero equity, or NEGATIVE equity. So in my years of experience you are looking for the 5% or less which can be the needle in the haystack.

The two biggest drawback of the foreclosure sales are:

  1. as-is where-is, if you mess up on evaluating the repairs necessary ot you mess up the title search you are as they say SOL!

  2. this is an all cash business, so of the sales require 100% of the purchase price plus costs within 5 minutes, other let you have as long as 10 days. In either event this is not go to your bank and apply for a loan time.

David Krulac
Central Pennsylvania

Does lender always show for trustee’s sale? - Posted by ken in sc

Posted by ken in sc on March 25, 2003 at 16:33:51:

The foreclosing attorney is the one showing up for the lender. He makes the bid(s) for the lender. How do they decide how much to bid? Many different ways depending on the lender. Some always bid the full amount of the loan plus back interest, fees, etc. Some get BPO’s (broker price opinions) or appraisals. Some use percentages of what is owed. You never know. I have definently seen a lender bid less than what is owed. Sometimes, if you call the attorney he will tell you the bid amount when he gets it from the lender, usually just the day before the sale. Many of the foreclosure sale investors are good friends with these attorney’s, and get inside info.