Vacant REOs, useless?

Question

Do most investors ignore vacant, overgrown grass , REO properties with code violations and tax liens? Have one that's been that way for a year, wondering if only strategy is offer the bank to buy it cash?

Steve Babiak · Answer

Mortgage documents do not indicate ownership; since they are a lender, those mortgage documents are a requirement for the lender to pursue the foreclosure.  Re-read David Krulac's post.

Steve Babiak · Answer

Morris Lucas - please clarify this matter.  The two sentences in that quoted piece seem to contradict each other.  In the first sentence you say that the tax assessor docs indicate it is still owned by the defaulted borrower.  In the second sentence you indicate that the name BOA is on the paperwork; what paperwork would that be?  If it is paperwork taped to the door or windows of the house, then it is exactly like what David Krulac just posted - it does not yet belong to the bank, but the bank is aware of the property being vacant and has taken measures to preserve the property.

David Krulac · Answer

Morris Lucas & Matt Devincenzo

It is a confusing situation.  B of A has had their signs and their locks on a house near one of mine for at least 2 years now.  There is even a phone number to call at B of A taped to the inside front window.  When i have called (on multiple occasions) they say that they have no record that they own that property.

That is true.  B of A started the foreclosure process, but the sheriff sale has not happened yet, possibly in a couple of months.

In the mean time, since 2+ years ago, the owner moved out, left the state, stopped paying the mortgage and abandoned the property.  Under the terms of most mortgages the lender has the right to secure the property that they do not own to protect their mortgage value.  that's what they did on the house near me, and that's what I suspect that they did on the property that you mentioned.

The property is still in the owner's name because the sheriff sale has not happened, even though it was initialized years ago.  B of A can NOT sell the house until after the sheriff sale and the deed transfers to them.

Technically its not an REO, at least not yet, despite the signs that B of A posted to the property.

Steve Babiak · Answer

BoA may have just been the servicer; it could even end up being deeded to Fannie, Freddie, or HUD (if it was FHA) - that (quit claim) deed transfer sometimes won't happen until it is under agreement with the next buyer.  Sometimes the delay in getting it listed is due to the claims these various entities make in trying to recover loss via the mortgage insurer.

Matt Devincenzo · Answer

Morris Lucas I'm a little confused here, in your first post you say a REO and the second that it's not foreclosed.

A REO is a property that has gone through the foreclosure process and the bank has taken it back and now owns it. As Bill and Steve said they will most likely not do anything until they list it with an agent and then you could bid on it.

An abandoned property that has not been foreclosed would likely end up being a short sale(especially at this point). In this case the bank has the final approval over the sale but the owner is still just that the owner so you can contact them to start the process of a sale since they are still on title.

Not sure if it would be worth it to pursue the owner, but if you do find him it may be in his best interest to try to work something out with you to get the property sold and out of his life.

Steve Babiak · Answer

Most investors don't ignore these.  But until the bank is ready to sell (usually by listing it with an agent), the bank tends to ignore investor offers (or counter with ridiculously high numbers).

Bill Gulley · Answer

Don't ignore them, but they are usually cash deals from the sound of it. If you have experience, banks can lend on anything if it makes sence, a decent LTV, as almost anything can be brough back or leveled and something done. Don't avoid them just approach with greater caution and understand of what can be ahead of you. :)

Jerry K. · Answer

Zombie foreclosures were written about recently in the Chicago Tribune and this link also has a video from a WGN TV story about them. http://www.mcall.com/topic/sc-cons-0418-umberger-20130419,0,2257948.column

Note how many RealtyTrac estimates there are in Florida 91,000. Illinois 31,600 and California 28,800.

Being a tax lien guy I tell people that tax liens rarely end up with the lien buyer getting the property.  However "zombie mortgage" situations have a much higher chance of the lien buyer ending up with the property.  Just be on the lookout for all the city code fines that have accrued still being attached to the property.

David Krulac · Answer

Morris Lucas

The bank can't deal with you and you can't deal with the bank until after the Sheriff Sale.  At this time before the Sheriff Sale, you could work out a deal with the owner...

IF

1. you can locate the owner?
2. you're willing to pay the debt owed on the property?
3. you can get the lender to do a short sale?

Morris Lucas · Answer

David Krulac- sounds like the exact scenario I am seeing. I guess this makes a little more sense now that the bank says they have no record of owning the property, as technically they don't ...yet. What do you plan to do in your case, just wait for the sheriff sale to happen?

Vacant REOs, useless?

Most Popular Reply