Asked by Jennifer, Michigan • Mon Jan 23, 2012
HOA liens are junior to the mortgage liens. If a "3rd party" (investor) buys the home at the county auction, then the buyer will be responsible for paying the balance of the mortgages. Hence, very few investors will want to buy these foreclosed homes at the auction, except if they can buy them for $10-20K.
If nobody bids on the home at the auction, then I assume that the HOA (which is the Plaintiff) will bid and buy the home. If they do this, wouldn't they be on the hook to pay the mortgages? If so, why would the HOA take the risk of foreclosing the home and end up owning it and be responsible for paying the mortgage? Do they re-sell them through a real estate agent and hopefully pass the responsibility of the mortgage to another buyer?
Or, in the scenario where nobody bids on the home, does the HOA let the mortgage lender (bank) bid the minimum amount so that the bank will eventually own the home? In this case, the HOA will be able to start collecting dues from the bank?
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