Purchasing Your Own Home at Foreclosure.. ???

[acesfull]

Hi All

This I believe will become an interesting topic. I believe a study of your state's foreclosure laws will be very helpful.

Let's assume a homeowner is using a strategic default method, an is able to pay the mortgage, however instead of paying, homeowner plays the delay game or for LS members The Hampster Wheel game.

Now let's assume your very discipline and you can delay the process for 25 months, most savvy players will delay longer however let's just assume 25 months.

Now let's assume you owe 250k on the property and it is worth 200k.. ok
Now remember, your discipline.. so let's assume your mortgage payment was 2k per month. Now you saved that 2k for 25 months under your rug.. SO you have 50k.. not bad.

Now come your foreclosure sale day, and you head over to the court house steps with 50k in pocket.. and a 44 magnum, just kidding about the magnum. Now your underwater home is selling for 180k and you raise your hand and bid. Wow you just purchased a home for 200k.. You proceed to the sherif's office to fill out some paper work and put down your 20% deposit of 40k.. Not bad, you just repurchased your home again, with the banks money.
Your new balance is 160k, so instant equity of 40k.. Assuming the value is still 200k. Plus 10k over for closing etc..
Anyway, I think everyone is getting my point. The problem that may arise is if there is any statue or law which will not allow this method to succeed, In that case, you may need to have a relative or significant other to purchase for you..

Please remember that we are all assuming here.. I just feel that this scenario, can and will happen. How will they police this method?
Just something for us LS members to think about.
I look forward to all reply's and opions. Keep thinking and fighting.
Best regards,
NJ-8 months
acesfull/HWP

[TomEason]

Hi All

This I believe will become an interesting topic. I believe a study of your state's foreclosure laws will be very helpful.

Let's assume a homeowner is using a strategic default method, an is able to pay the mortgage, however instead of paying, homeowner plays the delay game or for LS members The Hampster Wheel game.

Now let's assume your very discipline and you can delay the process for 25 months, most savvy players will delay longer however let's just assume 25 months.

Now let's assume you owe 250k on the property and it is worth 200k.. ok
Now remember, your discipline.. so let's assume your mortgage payment was 2k per month. Now you saved that 2k for 25 months under your rug.. SO you have 50k.. not bad.

Now come your foreclosure sale day, and you head over to the court house steps with 50k in pocket.. and a 44 magnum, just kidding about the magnum. Now your underwater home is selling for 180k and you raise your hand and bid. Wow you just purchased a home for 200k.. You proceed to the sherif's office to fill out some paper work and put down your 20% deposit of 40k.. Not bad, you just repurchased your home again, with the banks money.
Your new balance is 160k, so instant equity of 40k.. Assuming the value is still 200k. Plus 10k over for closing etc..
Anyway, I think everyone is getting my point. The problem that may arise is if there is any statue or law which will not allow this method to succeed, In that case, you may need to have a relative or significant other to purchase for you..

Please remember that we are all assuming here.. I just feel that this scenario, can and will happen. How will they police this method?
Just something for us LS members to think about.
I look forward to all reply's and opions. Keep thinking and fighting.
Best regards,
NJ-8 months
acesfull/HWP

Aces
Nice idea but where's the other $160k of the purchase price coming from? Foreclosure auctions don't allow contingency clauses in a sales contract. Therefore a buyer at a foreclosure auction must come up with cash to close the deal. If that buyer cannot borrow the money to close the purchase, he/she will forfeit the $40k. Then that unfortunate buyer will end up with neither the cash or the property.

[acesfull]

Hi Tomason

Thanks for clearing the whole sceaniro up for us..

Best regards,

NJ-8 months
acesfull/HWP

[AppleValleyRes]

Hi Acesfull,

Your outline of buying your own house is and has been my plan for a long time. My plan is to try to buy through a SS because I think I would have more control over the offers. If bank will not allow the SS, then I will let it go into foreclosure and buy at the trustee sale. My 1st missed payment was June '11, I have no intention of bringing the payment current but will attempt to prolong the foreclosure process in hopes of the value falling even further over the next several months. This will also allow me to secure financing from friends and family. My plan is to pay them rather than a bank.

My plan is much more detailed of course but I have just made my first step of not paying the mortgage in an attempt to get the bank to allow a SS.

[cheri]

Aces
Nice idea but where's the other $160k of the purchase price coming from? Foreclosure auctions don't allow contingency clauses in a sales contract. Therefore a buyer at a foreclosure auction must come up with cash to close the deal. If that buyer cannot borrow the money to close the purchase, he/she will forfeit the $40k. Then that unfortunate buyer will end up with neither the cash or the property.

when if two people live in the house, not married or even married for that fact, and the non borrower whos name is not on the loan does the bid ?

[TomEason]

when if two people live in the house, not married or even married for that fact, and the non borrower whos name is not on the loan does the bid ?

cheri
Thanks for your question. Anyone who has enough cash can buy real estate at a foreclosure auction. The foreclosing lender (or trustee in trustee sale states) doesn't give a hoot as long as the bidder has the cash with him/her at the sale. At the sale, before the bidding begins, every potential bidder must show the trustee his/her cash or cashier's check for at least the amount of the opening bid.

[cheri]

well i have about 20.00 dollars at the time lol!
but if we get denied, we can hamster wheel and save? hopefully it wont come to that, but how much are they asking for when bidding for a 200.000 dollar home? and seriously bidding?? I thought no one was buying, who would be there to bid against ? lol

but the only problem with the Hampster wheel game is,, many have been applying for hamp to prolong it, but if HAMP goes away in 2012, what can we do to keep it going?

[smalltownblues]

cheri
Thanks for your question. Anyone who has enough cash can buy real estate at a foreclosure auction. The foreclosing lender (or trustee in trustee sale states) doesn't give a hoot as long as the bidder has the cash with him/her at the sale. At the sale, before the bidding begins, every potential bidder must show the trustee his/her cash or cashier's check for at least the amount of the opening bid.

TomEason, It is my understanding the opening bid is set (at a minimun) the balance of the loan. Thus the reason why in most cases the Trustee obtains possession due the value being much less than what is owed. Is this true ?

[SurfwhenUcan]

TomEason, It is my understanding the opening bid is set (at a minimun) the balance of the loan. Thus the reason why in most cases the Trustee obtains possession due the value being much less than what is owed. Is this true ?

More or less. This is why so many properties revert to beneficiary. If the property goes back to the lender, it is now inventory and banks are not in the business of real estate, they are in the business of banking. Hence, the house is put up for sale at a discount on what was previously owed so it moves quickly. That's why no one wants to go to a foreclosure auction - most investors want to go after REO's for a better deal.

[TomEason]

TomEason, It is my understanding the opening bid is set (at a minimun) the balance of the loan. Thus the reason why in most cases the Trustee obtains possession due the value being much less than what is owed. Is this true ?

smalltownblues
A beneficiary will frequently set the opening bid at less than the loan balance. They do this to encourage 3rd party bidders. As SurfwhenUcan states, a beneficiary almost always ends up with the property. And the bene usually takes a loss at resale because that loan is underwater. So, if they can encourage a 3rd party to bid at the sale by setting a lower opening bid, that bene might suffer less of a loss because it won't have the holding costs and resale marketing costs that it does for an REO, and they can get that toxic asset off their books sooner.

[AppleValleyRes]

smalltownblues
A beneficiary will frequently set the opening bid at less than the loan balance. They do this to encourage 3rd party bidders. As SurfwhenUcan states, a beneficiary almost always ends up with the property. And the bene usually takes a loss at resale because that loan is underwater. So, if they can encourage a 3rd party to bid at the sale by setting a lower opening bid, that bene might suffer less of a loss because it won't have the holding costs and resale marketing costs that it does for an REO, and they can get that toxic asset off their books sooner.

Thanks TomEason and Surf,

After reading your posts, I think it would be best to convince the bank to allow me to SS. My home is $180K underwater. Based on your posts I think the opening bid at auction would be closer to the loan value than to FMV. Either way it goes, I will not continue to throw my money away nor will I try to keep my house if I have to pay more than currrent value.

Thanks to you both, I now realize I have to keep analyzing my strategy.