When Bank buys property at auction

[tack77]

I'm a newbie here and trying to grasp some things. Ive been reading when a house in foreclosure is sold at auction, and recieves a full bid, there will be no deficiency judgement. Why would a bank buy an underwater house back for the amount owed? Just curious

[Jeffrey L. Shurtliff]

I'm a newbie here and trying to grasp some things. Ive been reading when a house in foreclosure is sold at auction, and recieves a full bid, there will be no deficiency judgement. Why would a bank buy an underwater house back for the amount owed? Just curious

The majority of the homes in this country are backed federally. Freddie Mac Fannie Mae FHA. Any loss on the home is made up by taxpayer money.

[smalltownblues]

Jeffrey,

I see in many cases the lender will buy back the house for less than what is owed. The house then goes up for sale as a foreclosure and is then sold for even less than what the lender paid themselves at auction. What's the reasoning behind this? Why would the lender pay less than what is owed at the time of auction ?

[Jeffrey L. Shurtliff]

Jeffrey,

I see in many cases the lender will buy back the house for less than what is owed. The house then goes up for sale as a foreclosure and is then sold for even less than what the lender paid themselves at auction. What's the reasoning behind this? Why would the lender pay less than what is owed at the time of auction ?

I can only guess that each home is evaluated carefully by the lender and the loan docs. Guessing if there is evidence of an intentional walk then they would buy it for less and pursue a deficiency judgment against the defaulter. There are a few cases of this in my state that have been on the Television.

[smalltownblues]

I can only guess that each home is evaluated carefully by the lender and the loan docs. Guessing if there is evidence of an intentional walk then they would buy it for less and pursue a deficiency judgment against the defaulter. There are a few cases of this in my state that have been on the Television.

That would be a good reason (for the investor). I'm in AZ where the anti-deficiency laws favor the people. I'm guessing they don't really need to consider each states laws and just purchase below whats owed as standard operating procedure.

I have followed your story and hope you are feeling better.

Have a wonderful Christmas and Godd Bless!

[Jeffrey L. Shurtliff]

That would be a good reason (for the investor). I'm in AZ where the anti-deficiency laws favor the people. I'm guessing they don't really need to consider each states laws and just purchase below whats owed as standard operating procedure.

I have followed your story and hope you are feeling better.

Have a wonderful Christmas and Godd Bless!

Thanks Smalltown. You have a Merry Christmas also!