I bought this home from an HOA foreclosure auction. The house is worth $650,000 (conservatively). The previous homeowner took out a mortgage for $275,000. Since I bought it from an HOA foreclosure auction, I know the mortgage is a surviving lien on the property. My question is, do I have the right to payoff that mortgage? Also, do I have the right to get more information about the mortgage (like the balance, payments, etc.)? Thanks :D
Just got an offer on the house. I HATE when people low ball. The guy wanted $395,000. He so lucky he wasnt in front of me or I would have cursed him out so bad. Still cant believe he would offer $200,000 less than asking price ($595,000) on a house that is appraised for $672,000. I was so mad that I countered him back at $790,000 (2 times what he offered). Lets hope he gets the message...
LOL, it wasn't me (I didn't know about it or maybe it would have been).
Think about it, maybe you see that somebody just got a steal and possibly have some idea of their position of having to sell. Wouldn't you give it a shot? He may just be hoping you settle for $475,000.
What if I bought the HOA foreclosed home and the original mortgage was paid off years ago. But there is equity line of credit attached to the property few years after that, and before the HOA put the lien on it and finally foreclosed it. does the equity line of credit survived the HOA sale? thanks in advance
I know somebody (another BP member, as well as being in local REIA that I belong to) who, as one of his business activities, purchases second position non-performing notes. I once posed the question to him of how he deals with the first position lender. He avoids paying them off! He waits until the first starts the foreclosure process, and then he is contacted by somebody from the first lender.
But of course, he does NOT want the houses. Seems you WANT the house here, so you might have to take a different approach.
Certainly, the former owners will no longer continue to pay on that first mortgage, so it is only a matter of time until the first pursues foreclosure. You just might be able to line up a buyer before the really bad stuff catches up with you, and then your method does make sense - the buyer's funds will go first toward paying off the most senior lien positions, then junior lien positions, and then you would get paid.. My bet is that the first hasn't been paid in a while, so the first will be foreclosing - just a matter of when / how soon.
In this situation what happens when the first position lender forecloses? Does his credit get affected?
I bought this home from an HOA foreclosure auction. The house is worth $650,000 (conservatively). The previous homeowner took out a mortgage for $275,000. Since I bought it from an HOA foreclosure auction, I know the mortgage is a surviving lien on the property. My question is, do I have the right to payoff that mortgage? Also, do I have the right to get more information about the mortgage (like the balance, payments, etc.)? Thanks :D
How do you find a buyer in this type of home if you obtained a dirty title? I'm just trying to understand if it was me buying this home from you, wouldn't I do my own title search and see that there is a first mortgage lien? I didn't know it is possible to sell the home if you bought it from a HOA Foreclosure sale. I thought the only thing you could do was rent out the property while the first lender forecloses.
I purchase HOA's foreclosures (liens) all the time. The HELOC is recorded prior to the filing of the lien by the HOA .... it will survive the foreclosure sale (in Florida & California for sure). You can try a Quite Title or Declaratory Action via a license atty .. it does work if you can locate flaws in the title or transfers. Other than than try negotiating with the HELOC. I just completed a settlement that had a 79K HELOC for 15K. Just do your homework!
@Steve Babiak Hello Steve, I know this is an old post. But pertaining to the HOA foreclosure in which your friend purchases 2nd lien HOA foreclosures and then WAITS for the 1st lien most likely the bank to then foreclosure on him which we know can take quite some time and can be pushed back. Not sure, if you have any additional information on this is he able to rent out that property in the mean time / or live it in? What his exit strategy? Does he sell after the 1st lien does start the foreclosure process to gain back that equity? If you have his contact I would love to try and connect with him to see his thoughts. Reason I mention this I have an opportunity very similar to this with an HOA in FL and was just curious if this strategy was still working for him? Thanks so much!
@Steve Babiak Hello Steve, I know this is an old post. But pertaining to the HOA foreclosure in which your friend purchases 2nd lien HOA foreclosures and then WAITS for the 1st lien most likely the bank to then foreclosure on him which we know can take quite some time and can be pushed back. Not sure, if you have any additional information on this is he able to rent out that property in the mean time / or live it in? What his exit strategy? Does he sell after the 1st lien does start the foreclosure process to gain back that equity? If you have his contact I would love to try and connect with him to see his thoughts. Reason I mention this I have an opportunity very similar to this with an HOA in FL and was just curious if this strategy was still working for him? Thanks so much!
Sorry if my earlier post wasn't clear. The person I know purchases second position mortgages, not HOA liens. And he is now a very prominent BP member, @Dave Van Horn.
Whether the strategy of waiting for the first to foreclose works or not is not an easy question to answer, because each property has its own set of unique circumstances. Because Dave is buying pools of second mortgages, if a few don’t pan out they get offset by those that are profitable; when you buy a single property at auction and need for that property to definitely turn a profit, you have to be very diligent in your evaluation of the property’s circumstances.
@Steve Babiak Hello Steve, I know this is an old post. But pertaining to the HOA foreclosure in which your friend purchases 2nd lien HOA foreclosures and then WAITS for the 1st lien most likely the bank to then foreclosure on him which we know can take quite some time and can be pushed back. Not sure, if you have any additional information on this is he able to rent out that property in the mean time / or live it in? What his exit strategy? Does he sell after the 1st lien does start the foreclosure process to gain back that equity? If you have his contact I would love to try and connect with him to see his thoughts. Reason I mention this I have an opportunity very similar to this with an HOA in FL and was just curious if this strategy was still working for him? Thanks so much!
Jake, when you buy at an HOA auction, or any junior lien holder for that matter, you are buying the Property, not the lien. So yes, you get full possession. There are many investors who buy at these HOA auctions, even with negative equity, purely to rent them out until the bank forecloses….it’s purely a numbers game, how much to pay for how much per month for some estimated term of ownership until the bank forecloses. Of course, you need to make sure there are no rental restrictions in that HOA.
@Wayne Brooks Yes that is correct, I am aware of its only just a junior lien. I invest in vacation markets, is why I ask. Not sure if that would be viable if I were to win the auction and short term rent it until the 1st lien filed foreclosure...
In addition, if I were to win the auction. Would I be able to turn around and resell that property to try and gain that equity from the previous owner. Which in a sense would pay off the 1st lien and excess would be profit? With not a full clear title I am not sure if that even would be possible but was just curious if there were ways to go that route instead of renting it out.
@Jake Boss Yes, you own it with clear title except for the 1st mtg and any other liens. If there is equity, you can sell and profit. But, in south Florida, the auctions are Very competitive and the chances are buying at auction then reselling for a profit are slim.
@Wayne Brooks ok thank you! So once you take deed after the HOA foreclosure and the 10 day redemption period for the previous owner is over. It can be a quick turn around to sell on the market even with an outstanding 1st mortgage lien? Reason I ask I was unaware of the "due on clause" from that lien if the title was in fact transferred to me if they normally demanded payment in full. Or if that can be negotiated with the lender
Will obviously run the numbers to make sure the bidding price makes sense. But would I be able to make renovations to the unit then resell (assuming nobody lives there)? Or would it have be sold "AS IS" for a fast turn around
@Jake Boss If the 1st mtg is not already in foreclosure, it would take at least 6 mo.s, probably a year to foreclose. There would be no title issues, paying off the first when you resell would be the same as if you bought the property with that mtg.
Yes you can get info- request a payoff. If they give you trouble which most likely is just them not being familiar with this situation show them proof you’re the new owner once it has recorded and you’ve taken title. Sounds like a good buy though with ton of equity… question… how did you purchase it? You said hoa foreclosure which is when an hoa liens an owner because they don’t pay and so they have the right to foreclose to get the assessments they put on the property- was the amount just for the hoa assessment? - title company should have provided you with liens against then property unless you haven’t got to that part yet.