Buying own foreclosed home?

[ldelrosa]

Our neighbor's house was foreclosed early in 2008. With no buyers at the auction (and after many months), the bank sold the house to them for half the old purchase price. I could not believe it but they're back!
Sadly, we are in the same situation and will be foreclosed in Feb 09. Can I contact my lender and ask them now to sell me the house if there are no takers at a reduced price? Are there any laws against this? Or should I wait after many months before I contact them (in case no one buys it)? 1 out of 5 homes in our neighborhood are in foreclosure...

[Lisa in MN]

Idelrosa,
Wow, but you know when I read all the stories on the run around people get and my own personal experience dealing with WAMU- these companies are a little like Keystone Cops. I bet no one at the mortgage company realized what they did! No real input here for you, just the comment of another facet of the ridiculousness of how these companies do business. I can't imagine any other business that could operate in this way and succeed.
More weirdness

Lisa

[Moe Bedard]

I would be surprised if it is the exact same person that was on the title before is on the title to the home now. they may have purchased it in someone elses name...............I am not sure that after doing a chain of title........the bank as the seller and the new lender would sell it to the same person.

[The Professor]

I responded to ldelrosa's posting about this on another thread. The problem for Idelrosa is there is an existing second. If this borrower were to acquire the property at a later date after the foreclosure was completed on the first loan, the second loan would reattach. This is what is characterized as merger, and described in the quote that follows that I lifted from a lawyer's website.

Daniel

Q. What does this mean when debts merge?

A. Let's say for example that the first mortgage is foreclosing and forecloses out the second and third mortgage. The second and third mortgage holder no longer has any right or title to your home. You may still owe this money but they have no right to foreclose on the home nor do they have any security interest in the home in any way. If you had filed a chapter 7 bankruptcy prior to the sale and received a discharge after the sale you would not only not owe them any money and they would no longer have a security interest either. Your debt for all intents and purposes will be extinguished completely. If someone else buys your home at the auction the bank, the second and third mortgage holders have lost all their right to the property but on the other hand if you buy the property back the debt may "merge" back to the property with you and reattach, as if the auction never foreclosed them out.

[ldelrosa]

Many thanks for the clarification Prof...
We are in the process of settling with NC for $13k (vs $96k) so the 2nd will not re-attach once we complete this.
Sadly our house was finally auctioned this week at $166k (vs purchase loan of $433, purchase price of $480!) and went back to the servicer (gmac), weeks after i wrote them a letter to reduce the principal to min of $200k! They would rather go thru auction than reduce the principal! ... I would be interested to buy back the house for $166k but I am not sure how that could be possible with our bad credit. Can this be possible?

[flowride]

Here's a question that I wonder aloud? Say you form an LLC, then put your place up on short sale. Can your LLC buy back your own property on short sale?

[Kevin]

Originally Posted by ldelrosa

Many thanks for the clarification Prof...
We are in the process of settling with NC for $13k (vs $96k)

Can you please tell us all about how you did this, in great detail. Was is showing major real hardship or just smart negotiation? Threaten with bankruptcy?

[ldelrosa]

Hi Kevin, I'm not exactly sure - i wrote them a letter of settlement offering 6k and cited cc580. They countered with 32k. I offered back with 8k. The 16k finally went down to 13k, offer good for 6 months. We had a real hardship (death in the family, husband got laid off and then heart attack). (Sadly, things are better in the last 1 month, husband got a senior mgt job the same month when our house got foreclosed).
NC knew it was purchase money loan, we really do not have to pay them anything since both loans should be non-recourse. We just don't want to go thru any potential lawsuit besides the fact that we are still interested in possibly buying back the house. So it is really smarter for them to accept $13k than nothing. I've also read in several posts here that NC accepted less than 10% so i guess they decide based on capacity or asset search.
Hope this helps you.

[Kevin]

Originally Posted by ldelrosa

Hi Kevin, I'm not exactly sure - i wrote them a letter of settlement offering 6k and cited cc580. They countered with 32k. I offered back with 8k. The 16k finally went down to 13k, offer good for 6 months. We had a real hardship (death in the family, husband got laid off and then heart attack). (Sadly, things are better in the last 1 month, husband got a senior mgt job the same month when our house got foreclosed).
NC knew it was purchase money loan, we really do not have to pay them anything since both loans should be non-recourse. We just don't want to go thru any potential lawsuit besides the fact that we are still interested in possibly buying back the house. So it is really smarter for them to accept $13k than nothing. I've also read in several posts here that NC accepted less than 10% so i guess they decide based on capacity or asset search.
Hope this helps you.

Oh, I see. I hope all is well now with your husbands health. Thanks for the info.

I have a recourse 2nd mortgage that I guess they could sue me for the whole thing and win. So I'm not so sure they are going to be happy taking less.

Hmmmm. 2:30 in the morning here and of course I can't sleep cause i can't stop thinking about this.

[ldelrosa]

You can either hire a lawyer to do the negotiation/settlement or do it yourself, my letter was also reviewed by a lawyer. I also tried to be very polite and spoke from the heart whenever I talked to them regardless of their tone. Have you considered bankruptcy?

[ldelrosa]

flowride,
I just read the thread " Who Can Buy Our Home When they Auction It?? " and this is what *** says:

---

be careful with that if she has to get a loan on the property........
If she were paying cash for the property that would be different ........... but the sale with a loan would be considered a foreclosure bail out and a non arms length transaction. There are not many lenders that will fund a transaction like this. A non arms length transaction is among related parties.......related persons include individuals connected by blood relationship, marriage, or adoption (legal or in fact).
And when the question would arise............Is this transaction among related parties on her loan application and at the closing.....if she were to answer no.....the possibility is always there for an SAR (Suspicious Activities Report) to be pulled on the new loan file at any time.............
It is very sticky territory.......

*******
What was said was that if it was during auction, that is not legal. But if it was bank REO'd then we buy (or a relative or a business entity buys it), it is ok. Our problem now is who will loan us the money unless we pay in cash?

[nogero1]

So....in this hypothetical situation, if someone did have the cash to purchase your home/investment property back at auction it seems you could have a non-relative/friend buy the house for you and then quit-claim it over to you after sale?
Anything wrong with that?

[flowride]

Thanks for the info. As it turns out, I'm just going to short sell this place here in CA. My biggest concern is that I have two properties, including one in FL. LoanSafe was able to get a mod on that one, though the Obama plan kind of shot the better mod B of A had planned in the foot! I would like to keep that one.

Now let's say the property here does sell for the $120k less than what it's worth and I owe that amount. Does the debt relief act of 2007 protect me or not? I have heard different things, including that it's up to the individual investors. I can't see these people just writing it off, seeing as how they've taken 10 months to keep on delaying any mod. Man, EMC sucks.