Posted by JT - IN on July 09, 2001 at 14:23:50:
You ask several questions in your post, concerning the VA backed loan in foreclosure. In order for the Mortgage Co. to collect on the Gov’t Guarentee, they must purchase the property at sale. Now, if you outbid their exposure, (the mount of the loan and all costs and fees), then you would be the high bidder, the lender made whole and the Gov’t provides no reimbursement to Lender. That doesn’t happen very often unless the VA loan is older, otherwise, there is not normally enough equity to indemnify the Lender, costs and fees, and leave enough for an investor to bid on the property.
As far as negotiating or assigning after the sale, on a Gov’t Guar loan, the same answer applies. The Lender must render free and clear, unencumbered title to the Secy of Housing, in order to reimbursed. No Dice!
All of your questions would be possible and probable, if not for the Gov’t guarentee, or Gov’t Insurance, in the case of an FHA loan. Conventional loans, w/o insurance form Fannie Mae or Freddie Mac, may be negotiable at a discount, or assigned after the Trustee Sale.
JT - IN