Posted by John Corey on January 13, 2006 at 24:13:02:
Brian,
By saying you won at auction people assumed the foreclosure auction where you are bidding on the property and not the note. Somehow I read your message differently and came up with the idea that you bought the note.
To clarify…
Was there an auction? If so, what was being sold at auction?
How is the owner on the title now? The original borrower/property owner? If not, are you on title? If you are on title did you buy the note in addition so you can cancel the note as you are on both sides?
John Corey
Side point: Owning the property and owning the debt are far from the same thing. One is an IOU and the other is a piece of dirt with possible improvements. Legal implications to both and the legal implications are very different.
I have won at the foreclosure auction. Now what? - Posted by Brian_wa
Posted by Brian_wa on January 11, 2006 at 12:49:03:
I live in Washington State. I was a winning bidder on a 2nd deed of trust. Now I own the house subject to the first. I’d like to know how to go about setting up the payment and informing the 1st of the situation.
Also, do I have to get a new homeowner insurance policy? Is there anything else I should be worrying about?
Posted by DaveD (WI) on January 13, 2006 at 08:15:53:
Well, I guess my earlier posts were only kind of accurate, based on my initial take. But then you were kind of unclear about the issues. So you actually own both the note and the RE, right?
Catbird seat.
Just call the primary and get your payments going. John’s advice about the courtesies will apply. Yep, place insurance on it, fast, or the primary will place their own on it… way more expensive. Nice buy, BTW.
Re: I have won at the foreclosure auction. - Posted by Natalie-VA
Posted by Natalie-VA on January 11, 2006 at 15:55:27:
Brian,
Yes, you need your own insurance ASAP. I don’t know about Washington, but here in Virginia, you assume the risk off loss at the trustee sale…even if you haven’t gone to settlement yet. I would get that insurance FAST.
Posted by Kevin IL on January 11, 2006 at 14:41:04:
Brian,
I’m not sure what you meant by this statement: “I’d like to know how to go about setting up the payment and informing the 1st of the situation.”
If you bought a second lien then you have to pay off in full the first lien to get possesion of the house. Also, you will need to pay the outstanding property taxes…if any. The first lien is not going to take payments. They will want a cashier’s check for the full amount of the lien.
Posted by John Corey on January 11, 2006 at 18:52:15:
The advice is inaccurate.
There is a message from Bronchick (maybe in the other forum) that the Due On Sale clause can not be enforced if a junior lien holder is defending their position.
Basically, sharks extend professional courtesy to other sharks. A lender will allow a junior lender to bring the payments current and in effect assume the loan though legally this is not an assumption.
Posted by DaveD (WI) on January 11, 2006 at 16:01:49:
Houses are foreclosed all the time subject to other liens and encumbrances. And yes, the first can and will take payments from whoever ends up with the house.
You said …“then you have to pay off in full the first lien to get possesion of the house.” Untrue. He bought the house at auction. He “got the deed” via forced sale. That means he owns the house, including the right to possess. Now, THAT might be subject to having to evict in order to gain possession, but it is pretty straightforward when you visit the sheriff with the sheriff’s deed in hand! Lenders do it all the time.
True, the 1st can demand payment in full, because their loan agreement is pretty much kaput. But they, too, would have to go back to court to enforce it. Sounds like just getting a payment might be easier, no?
As to your statement about the taxes. Again, untrue. The taxes don’t have to get paid until the county would force, by sale, the same house.
Mind you, if someone wants to place new institutional financing on the above situation, then you are correct… everything needs to get paid off. Clear title and all that stuff are important to banks before they lend.
Posted by Brian_wa on January 11, 2006 at 20:45:26:
Dude,
Learning from the book is oftentimes different than praticing it in real life. I know what I’m doing. I just want to know how others are handling it so I could learn from them. I didn’t bid on this house btw. I actually bought the 2nd, then foreclosed. Here are the numbers:
Market value: 240k
1st: 142k (no arrears)
My costs to buy 2nd and fees to foreclose: 25k
So I’m in it at 167k when it’s worth 240k. I can make 50k off this property with my eyes closed.
Posted by DaveD (WI) on January 12, 2006 at 06:36:08:
He is not the junior lien holder, John. He is the owner. He bought the house at auction, not the note beforehand. So he gets to dance with the primary lender, without the courtesies, of course.
Posted by John Corey on January 11, 2006 at 20:26:21:
It should not make a difference. The steps to protect your position as a junior lien holder include taking over the property (foreclosure or deed in lieu).