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Originally Posted by briknope  If the said home has equity then it would most likely go up for auction about 3 months after the foreclosure is filed. If the bidding goes for more than what is owed, then the owner gets a check and the bank gets the principal owed. One would have to assume a home with equity would easily auction off for more than what is owed on it. |
I certainly wouldn't make that a general assumption - not in the current market-situation and not unless there is A LOT OF EQUITY.
I would also be careful when assuming that a house with equity sells very fast. Again, not necessarily true in today's market.
So how do we define "equity"? That could be $100K or $1K...so taking "equity" or "no equity" as the dealbreaker for the NPV
CAN be very misleading. I guess that's what darkdays meant.
We also have to keep in mind that the value that has been assumed to determine the amount of equity prior to a foreclosure won't be the amount the lender gets when the property is going up for auction. How much of that equity (if any) is going to "survive" set auction is also hard to tell.
The NPV is very complex: The question isn't simply "has it equity now?" - it's more of "how much will be left after a foreclosure/auction and when will the money be available to re-invest?".
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Originally Posted by briknope And if not, then the lender gets most of it and writes off the rest OR sues the borrower for the deficiency. |
Which brings us back to the NPV. Writing off or suing certainly doesn't favor a foreclosure when it comes to the NPV. If somebody lost his/her home due to a foreclosure, it's very unlikely the lender will get money from suing.