so u won on auction..

7 Replies

Lets say you are sitting on auction and you entered the winning bid. What happens if there were 3 mortgages on the property with 3 different banks ? kind of unusual situation but there are 80/20 mortgages from back in the day when they used to do that... Does it mean that you need to go thru the same process with all lien holders ? 

What type of auction was this?  Did one of the three banks foreclose?

If it was a result of a foreclosure, what position was the foreclosing lender in? The type of foreclosure and lender position will determine what if any rights to the property may have survived the sale. 

how would I determine which mortgage they actually foreclosed ? the bidding starts with an amount that does not tie to any mortgage balance or fraction there of

the auction is the judicial sales ..plaintiff (bank) is the winning bidder most of the time. sometimes 3rd party bidder wins. this is IL specific. I understand I might be responsible for mechanical liens or back taxes or past due HOA assessments but I have a hard time to understand if I might be responsible for other mortgages as well. in the attached picture you will see the flow of recorded documents. asking attorney to do a title check for every property is not possible. the below is public information that can be looked up by anyone

Originally posted by @Robert D.:

how would I determine which mortgage they actually foreclosed ? the bidding starts with an amount that does not tie to any mortgage balance or fraction there of

The best way to do this is order an O and E report (ownership and encumbrance report) from a title company. That should tell you which loan is where. Don't bid on it unless the 1st is what is foreclosing.

I fully agree with Andrew Syrios.  The worst thing that can happen is purchasing a property through foreclosure auction just to find out you bought out the 2nd mortgage and still owe the 1st.  Sadly, it is a story that happens too often.  Generally when people are trying to save a few bucks on the front end and not get a title search / O&E report.  

Be careful.  There are very good deals out there but proceed with caution.

O and E report (ownership and encumbrance report) from a title company--> what else would they be looking at other than recorded documents posted online ? i need to understand what the recorded documents mean and can determine the status of the mortgages then ....so I guess the next step would be to have a couple of working sessionswith an attorney ...

or maybe the best way is to count number of recorded RELEASEs and MORTGAGEs

if the owner refinanced the place couple of times and has 1 mortgage only the number of "mortgages" will always be higher than number of "releases" by 1. if they have couple of mortgages than the number will be at least 2. correct ?

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