puzzeld - low LTV house sold to 3rd party

I'm very new to foreclosure investing and really want to learn from you guys here. Here is a case I ran into today and was puzzled by the course it took.

* SFR in SF bay area, specifically in an area where housing price has been holding up quite well
* at 12/09, house est. value was $1.1M, loan $470K, equity $730K.
* NOD 5/7/09
* NTS 9/21/09, starting bid $27K, sold to 3rd party for $190K

Can some one help me to answer (or speculate),
1) Since the owner had a large equity amount, why didn't he short-sale it, say for $800k, and still could get $330K, vs loosing it all. As aforementioned this is an area with housing price declined at most 20% from the peak, so selling at this level of discount should have been no problem.

2) Why the NTS starting bid was so low, compared to the loan amount.

Thanks!
-Kevin

Edited: 06/26/2010 at 11:34AM

Jim Wineinger

Real Estate Investor · ten mile, Tennessee

1501 posts
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Icon_minipost Feb 08 '10, 02:38 PM

* NOD 5/7/09 __
This is the date to determine the loan amount for sale purposes

.
* NTS 9/21/09, starting bid $27K, sold to 3rd party for $190K
This is what the sale manager accepted as low bid and it was bid up to 190K for highest bidder.

* at 12/09, house est. value was $1.1M, loan $470K, equity $730K

This date does not matter to the sale process at all. If a loan exists at this time, the loan is one taken out by the new owner and does not reflect upon the sale that was held 3 month earlier.

Banks do strange things these days, there is no doubt of that. It just may be that the bank did not protect their interests and the property was sold at a tax sale for the amount of taxes that were due. This would happen irregardless of how far along the foreclosure process is because tax liens are superior to all other liens. It is also a very short time from the NOD to the sale. It is doubtful that the NOD triggered this sale as that process usually takes more time than 4 months due to all the recent new forclosure process changes and moratoriums in some areas.

I do not think the two are connected, this time.

Edited: 06/26/2010 at 11:34AM

Jason S.

Real Estate Investor · Upland, California

410 posts
3351 Influence
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Icon_minipost Feb 09 '10, 03:59 PM

Reasons for the bank:
1. Their could have been other liens.
2. Are you certain that the NOD, NTS, and liens you are looking at are all for the same loan?
3. If you are really curious then pull all the docs and cross reference the recording document numbers, loan numbers, apn's, etc to ensure everything was as it appear to you. Who knows maybe if something is not right you have a way to help the owner get the property back via a lawyer.

Reasons for the homeowner:
1. Who knows.... maybe they owe so much in taxes or whatever that they just don't care.
2. Maybe the husband does not want the wife to get the cash from some divorce settlement. or vice versa
3. Could be a dozen reasons - all of which I have seen.

Edited: 06/26/2010 at 11:35AM by Jason S.