BPO not even close to true value
I'm an international investor from Australia, I purchased my first ever note in November 2015. It was a non performing first mortgage with an UPB of 116k, secured by a triplex in Luzerne County, PA. It was in the final stages of foreclosure. The homeowner had declared bankruptcy and had not paid property taxes since 2008, total taxes and municipal liens total 28k.
The BPO indicated the property was worth 80k, Zillow estimate was 80k and the county's appraised value was 146k (which they had been basing taxes on for the last 8 years). The property has been vacant for several years at least.
My servicer took out forced place insurance on the building once I bought the note, prior to that it was uninsured.
I sent a local realtor to check on the place and ensure it was secure, and also to fit new padlocks as there were no keys provided by the previous note owner. In the process she had a quick look inside and discovered the place had been totally trashed, all the copper was gone, graffiti on walls and ceiling, toilets ripped out, faeces and urine everywhere. It also appeared to have some roof leaks in the top level.
The realtor estimated the current value at approx. 20-25k.
There is a sheriff’s foreclosure sale scheduled for early April so I need to quickly re-evaluate my options now I know the condition of the property.
I find it highly unlikely that anyone would place a bid at the sheriff’s sale given that the starting bid will be 28k (total taxes, etc. as per Luzerne sheriffs rules).
I know I'm going to get burnt badly on this deal, it's just a matter of minimising the damage now.
So what are my options
1. Can I make a claim on the forced place insurance for the damage to the property?
2. Cancel the entire foreclosure and just walk away, letting the city & bankrupt homeowner sort out the property between themselves?
3. Allow the sheriffs sale to proceed, choose not pay the delinquent taxes and let the city take the property to a tax deed sale. Could the city then pursue me for any shortfall?
4. Plead with the county's appraiser to retrospectively reduce the back taxes because they've been ridiculously overcharged for such a long period of time.
5. Attempt to find out if any tax lien certificates have been sold by the county, and offer to pay them out at a reduced amount.
Any help or other suggestions are very much appreciated.