At this point in time the borrower who is behind on his payments still owns it. Because he did not pay, the trustee will sell the property at auction on Tuesday at the county courthouse.
You can approach the current owner, make an offer and if accepted, you can try to get the bank to hold off on foreclosure. They usually will not, unless the deal nets them more money than they expect through foreclosure.
Once the auction is complete, either the bank will own it or a bidder at the auction will own it. If the bank successfully buys it (by bidding what is owed on the property), then you can approach the bank about buying it. However, if they have a large number of REO (real estate owned) properties, they won't entertain selling it until it is processed to their internal asset manager.
If another bidder buys it, you can approach him about making a deal.
You can bid yourself at the auction. You will, however, need cash (money orders, cashiers checks, etc) to support your all-cash bid. No, you can't bid and then go get a mortgage loan. It is strictly cash.
By the way, this procedure is uniform across all counties in Texas (no, Ron, there are not different procedures). Please understand it is not the bank who owns - they can't sell it until they own it (you can't buy it from them right now). The trustee is selling on behalf of the owners because the bank wants to be paid. Also, the foreclosure action will wipe out all junior liens. Kim, there is nothing to check as far as liens are concerned. The title will be clear except for taxes.
It is probably too late to buy it from the bank by anyone other than the owner, who retains the right to redeem the house up to and just after the date of the courthouse sale. I have found that the best source of information on auction rules/etiquette is provided by the auction houses themselves. And most of those have websites with easily located phone numbers. I do know that anytime an auction in our area is stated to be subject to a 2nd/3rd/4th mortgage or an IRS lien we generally stay away from those. Track down that auction house and go in with a good understanding of the property value (use worst case scenario since you don't know condition) and DO NOT bid above your pre-determined amount. Also make sure you are eligible for a loan that will fit the property condition. Best of luck.
It's a learning process and learn slowly.
Thanks for the help.
My greatest concern is that if I get the bid that there are no hidden fees, liens or processes will complicate pocession. Fortunately I am in a position to lease it to him for at a price for a while that covers only taxes and insurance. Time has run out.
Probably time has run out....best to let bank foreclose and then purchase as REO.
You may be able to buy it before the evict, if you want to rent back to the current owner.
Then again if he is not paying the bank, will he pay you?
If you can give me the address I don't mind looking it up and trying to figure out who the right
person might be to speak with.
How will I know if there are liens, etc? Obviously, I'm way out of my league with time running out (sounds like Congress). I would hate for my neighbor to be put out on the street this summer. He has basically given up. You each seem very knowledgeable, helpful, and of good will. Thanks.
The priority of liens is government (tax) liens, "first" mortgage lien, "second" mortgage, HOA, mechanics, etc. A higher priority lien's being foreclosed will invalidate the lower liens. So, if the HOA forecloses, they do take title to the property, but subject to the taxes and mortgages.
The first lienholder often pays the taxes in order not to have a tax foreclosure wipe out the mortgage lien. The mortgage company then adds the amount of the taxes to total due for the mortgage balance.
As a side note, the HOA actually has a higher priority but most CCRs contain a subordination clause that automatically places the HOA's claims behind the purchase-money mortgage lien. This is included in the HOA documents because most banks simply won't lend if someone else (besides the government and them) can foreclose. I have heard of one HOA that refuses to subordinate.
Some foreclosures occur with a redemption period following the sale, meaning the owner can pay off the amount that was foreclosed for, plus some fees and get title back. This is not true of a mortgagee's trustee sale.
A strange occurrence can be that the HOA forecloses, and then because the HOA doesn't pay the first or second mortgage, they get foreclosed on, too. If the HOA sells at auction and an investor buys the redeemable title, he faces the same situation. He can be foreclosed on by the mortgage company for non-payment.
Faizur Rahman, Ph.D. SFR
Broker (Realtor) /Loan Officer (NMLS ID: 351183)
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To buy directly from the bank, you need to talk to the trustee - and they may not want to talk with you. If the bank stands to make more money by foreclosing and re-selling at a later date, then that is what they will do.
Then wait for bank process it can be weeks up to months OR year prior to getting the home through all the lender processing systems.
Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Understand that this is complicated; every County in the US probably has a different procedure:
Mostly they just want cash, on the spot.
You might need to do some research first.
You probably will not get a Low-Ball offer through.
Good luck and may God bless