Real Estate Investor · Miami, FL · Member since 2012 · 2 posts · 0 votes
Ignorant me not knowing the foreclosure process bidded online $10,000 on a HOA Auction and won. I did a title search afterwards and found out two liens on the property, 1st lien for $124,000 and 2nd for $31,000. I also found out that the 1st lien holder had submitted a Lis Pendins last year. The property's assessed value is $32,000. My title agent suggested I contacted the bank to see if they will be willing to work out deal. At this point I am quite desperate and cannot imagine what could happen if the bank refuses to negotiate a discounted cash deal (sort of like a short sale). I could offer $22,000 cash to the bank which is all I got. I already accepted the idea that I just gave away $10,000 if the bank refuses to negotiate with me. Still Painful and costly to me.
Anybody with a similar experience? Any advice on how to approach the bank? I really appreciatte the help!! thx
You're not the first one to make this mistake. In a case like this the HOA is really hoping for a bidder who's unaware of the actual situation. They get their money and the bidder ends up with nothing.
Is it possible to unwind the deal? To refuse to pay up?
Unless you can get the banks (not just one, both of them) to accept your $22K, there's really nothing you can do to stop them from foreclosing. Clearly you're not going to pay them the amounts they're owed.
if you already paid the court clerk, there is not much you can do but consider it a very costly lesson. The superior lien holders will not negotiate, you are not the debtor and have no authority on the note.
You might be able to rent it out while the bank forecloses. If there are tenants in place you could have them pay all future rents since you are the title holder until the bank forecloses.
I made a similar mistake recently myself. You could negotiate with the superior lien holder by contacting the previous owner and have them sign a consent form. Just from the amount of the outstanding balance it sounds like it is very unlikely you will be able to negotiate a payoff. Your best bet is going to be to rent it out. Since you are also in Florida you may still have a year or two of rentals time even though the lis pends has been filed. In my situation the outstanding balance was not as high and plan to contact the previous owner in the near future. I have also considered waiting till it comes to auction and bidding. In any case I have had it rented for two months now and by the time the auction actually comes around I will have more than recovered my money. There are actually people who make a business of this. Although they seem to stay below $10,000. I am actually going to dabble it in soon myself. In short don't fret get it rented and you ought to have your money back in 12-18 months. The lesson I learned from my ordeal was make sure your title agent understands what you are doing and has experience with it. The title agent I use now actually handles quite a few of the auction bidders here in Jacksonville. Good Luck!
Thanks for your quick replies. I thought about renting it but the property most likely is in bad shape and in need of repairs. My plan was to rent it out to section 8 so i would have to spend more to bring it up to housing standard. Right now i am willing to take the loss, learn the lesson and move on. Is there a way i can get my name off the title, refuse it, and avoid losing more money or avoid liability?
I spoke with someone a couple days ago that handles a lot of HOA liens and he said they sometimes work with a short sale negotiator to get a reduced payoff. The best part about it was he said they don't require the previous owners consent to handle it. This may be a good option as you'll have someone who has a lot of experience handling short sales. Please let us know how things are going.
Tim Czarkowski Tim, can you tell me more about the short sale negotiator who is working with owners who take properties subject-to senior liens. I'm working my own reduced payoff now, but only because I couldn't find a single SS "specialist" who could even understand the idea of a short pay. I got about a dozen calls and emails from SS people who saw some of my posts here on BP about taking overencumbered properties sub2. But they truly had no experience or understanding of the difference between a short pay and a short sale. They've never worked a deal without a listing, a pending sale and a participating borrower.
I'd be interested in talking to such a SS sale negotiator. If you have contact info, you can write me at my email in the signature. Thanks!
I didn't get the name or number for who he was using, I assumed any negotiator would handle it. I guess that's what I get for assuming. I'll send him an email and see if he's willing to share that with me. He works the south Florida area so I assume that's where the negotiator is located but of course I might be wrong. I would assume that they could handle one in California just as well as Florida. I need to take it easy on this assuming, I'll let you know what I find out.
Tim,
I'd be interested too. I do some short sale negotiating. This situation, without the previous owner's participation seems to be a gray area. As far as I know, some lenders will do it, some won't. Some title insurance co.s won't underwrite these situations. Even with the lenders waiving any deficiencies, which would mean no liability to the previous owner, it's still seems dicey.
Well that was a no go. He just said he uses a local title company with whom he does a lot of business. Sounds like you have to find someone who is willing to take on something new. I imagine it's not a real common thing so there are probably very few people with experience. I'll have to start looking myself fairly soon. If I have any success I'll let you know.
Thanks for checking. I had checked with my title company 6 months ago because had read that in other states the national title companies are doing short sales. Chicago Title in my area doesn't do short sales. The lender wouldn't respond to my requests for a payoff amount. So, I put the property under contract and into escrow in order to have the demand come from an escrow agent. They made two demands. The lender didn't respond to either citing that I wasn't the borrower. Civil code is my favor here as lenders are required to respond to successors in interest of the borrower and there's a fine for not responding in 21 days. So far the lender has six counts that they owe me for if I feel like suing. :) I'll just keep making a request every three weeks.
I was able to go back and get an authorization to release from the borrower which gives me permission to negotiate and tender a final payoff. So, at least the lender is speaking to me now. But without the ATR I really do think I'd have to sue to get the lender to just to give me the full payoff amount.
K. Marie Poe T quote you-" But they truly had no experience or understanding of the difference between a short pay and a short sale." Me Too-What is short pay?
F Foster - short pay is basically when the lender accepts a discount on the pay-off without requiring a sale. A short sale ends up with the property being sold to a new owner.
A short sale involves a sale of the property. The borrower/owner agrees to sell and find a buyer and the lender agrees to a discounted payoff.
If I buy the property at trustee sale and it's subject to senior liens, and I want to keep the property and pay the lender less than they're owed, that's a short pay. There's no sale. I'm just an owner with a property with a lien that I want to pay it off in full for a discount.
IMO short sales since the bubble have become increasingly agent driven. The lenders expect now to work with agents and to pay agents a commission to sell and manage the short sale. 10 years ago if I bought a property subject-2 and wanted to pay off the lender less than what they were owed, the bank and I spoke the same language. They didn't require that the property be listed. They didn't require an authorization to release from the borrower. They didn't require more than one BPO or appraisal. We are in a different time.