Tricky California HOA foreclosure

3 Replies

I'm asking as an HOA president. Our HOA foreclosed on the property, the house went up for auction with a starting bid of about $45k, nobody bid (presumably due to the the unknown 1st mortgage amount), then the property reverted to the HOA. The HOA now owns the property under a trustees deed.

Prior to the court steps sale/default of the property to the HOA, the HOA had long since filed a Notice of assessment (2009) and twice the lender filed a notice of default. The first was rescinded with a filing. The second was not, but the lender never foreclosed and pushed for a sale. I gather the lender is "parking the NOD" as they say. The last action by the lender was to file for a substitution of trustee for what appears to be a collection foreclosure servicing company called Western Progressive, LLC.

All attempts to contact the lender to get a payoff previously have been to no avail. This last filing 2 weeks ago gave me the above company and I am preparing a fax on behalf of the HOA to request the payoff amount. We think it is between $425k and $475k; everything north of $399k is default amounts since 2012.

My question is what would the wisest thing be to do here? Should we list the property and try to sell it, disclosing the 1st mortgage encumbrance and work out a condition in the sale to satisfy all the HOA back assessments and let the buyer handle the 1st? Or should we try to cut a deal with the lender so we can get more money than we are owed and also be able to pay off the lender; not to mention sell the property under market a bit so the buyer has too to either improve or flip? The last comp for a similar unit in our complex wen for $680k.

If your numbers are right, I'd sell it and keep the profits. 680-475=205. Use the 205 to pay closing costs and HOA arrears. The rest is profit. Let escrow deal with getting the payoff demand. It's not a short sale so no need to disclose anything about the first. This is simple, am I missing something?

Originally posted by @Gregory Stone :

I'm asking as an HOA president. Our HOA foreclosed on the property, the house went up for auction with a starting bid of about $45k, nobody bid (presumably due to the the unknown 1st mortgage amount), then the property reverted to the HOA. The HOA now owns the property under a trustees deed.

Prior to the court steps sale/default of the property to the HOA, the HOA had long since filed a Notice of assessment (2009) and twice the lender filed a notice of default. The first was rescinded with a filing. The second was not, but the lender never foreclosed and pushed for a sale. I gather the lender is "parking the NOD" as they say. The last action by the lender was to file for a substitution of trustee for what appears to be a collection foreclosure servicing company called Western Progressive, LLC.

All attempts to contact the lender to get a payoff previously have been to no avail. This last filing 2 weeks ago gave me the above company and I am preparing a fax on behalf of the HOA to request the payoff amount. We think it is between $425k and $475k; everything north of $399k is default amounts since 2012.

My question is what would the wisest thing be to do here? Should we list the property and try to sell it, disclosing the 1st mortgage encumbrance and work out a condition in the sale to satisfy all the HOA back assessments and let the buyer handle the 1st? Or should we try to cut a deal with the lender so we can get more money than we are owed and also be able to pay off the lender; not to mention sell the property under market a bit so the buyer has too to either improve or flip? The last comp for a similar unit in our complex wen for $680k.

 Gregory

Sorry to here of your troubles, but you have many plays here as it sounds like you know. I think the best bet is to obtain your 1st mortgage payoff and sell for the biggest number you can. The HOA could joint venture the deal or do it on it's own.

I'm wondering do you as the HOA president get solicited for such a thing and what would they need to enter into such a venture. This seems like a great way for an entrepreneur to produce a WIN/WIN for everyone. If a company could come in and manage something like this for your HOA would you see any value in that? I'm not making you an offer, just wondering if this happens enough to be an issue for you.

Originally posted by @Gregory Stone :

I'm asking as an HOA president. Our HOA foreclosed on the property, the house went up for auction with a starting bid of about $45k, nobody bid (presumably due to the the unknown 1st mortgage amount), then the property reverted to the HOA. The HOA now owns the property under a trustees deed.

Prior to the court steps sale/default of the property to the HOA, the HOA had long since filed a Notice of assessment (2009) and twice the lender filed a notice of default. The first was rescinded with a filing. The second was not, but the lender never foreclosed and pushed for a sale. I gather the lender is "parking the NOD" as they say. The last action by the lender was to file for a substitution of trustee for what appears to be a collection foreclosure servicing company called Western Progressive, LLC.

All attempts to contact the lender to get a payoff previously have been to no avail. This last filing 2 weeks ago gave me the above company and I am preparing a fax on behalf of the HOA to request the payoff amount. We think it is between $425k and $475k; everything north of $399k is default amounts since 2012.

My question is what would the wisest thing be to do here? Should we list the property and try to sell it, disclosing the 1st mortgage encumbrance and work out a condition in the sale to satisfy all the HOA back assessments and let the buyer handle the 1st? Or should we try to cut a deal with the lender so we can get more money than we are owed and also be able to pay off the lender; not to mention sell the property under market a bit so the buyer has too to either improve or flip? The last comp for a similar unit in our complex wen for $680k.

 Gregory 

How did this work out, what option did you chose?

Jim