Flipper/Rehabber · Houston, TX · Member since 2020 · 88 posts · 59 votes
I have found a SFR going to be offered at a sheriff sale for the delinquent HOA fees ($5488). There is also an existing mortgage with a balance of approx $250K. I don't understand how this works. If am the high bidder of , let's say, $25K, what happens to the mortgage balance? I don't know if the mortgage payments are up to date. Is there a possibility the mortgage will reimburse me and add it to the mortgage balance? Any insight to this is great appreciated. Houston Texas area is the location.
@Shelby LeBlanc You would simply own the property, subject to the debt of the first mtg. Yes, it is difficult to guess what the balance is since the lender won’t/can’t talk to you about paying any arrears and just continue making the payments, without written authorization from the borrower. Even wit the authorization, they are under no obligation to let you continue with loan. All the bank has to do legally, usually after much hounding, is give you a total pay off, and then accept it.
You need to be prepared to pay off the first mtg. Have you verified the 1st mtg is not already in foreclosure? I’ve seen people buy at the hoa foreclosure on Monday, then lose it on Friday to the bank foreclosure.
A lender will ALWAYS bid at least the amount that is owed them. Once they win the bid, they put the property on the open market to get maximum price. The HOA position is secondary, and States have different requirements as to how much of the past dues get paid at a foreclosure. Once the Bank owns it, they pay the current HOA fees, again depending on State law.