Real Estate Foreclosure Questions

[Orange Guzzi]

If the Sheriff auction gets more for the mortgage company than the payoff of the foreclosed mortgage, who gets the profits?

Or, If the mortgage company bids on the property and wins and then resales the property for more than the winning bid price and the foreclosure price, who gets the profit?

Pay off $28,000,  Sold for $70,000.  Big profit.

[jwh20]

If the Sheriff auction gets more for the mortgage company than the payoff of the foreclosed mortgage, who gets the profits?

Or, If the mortgage company bids on the property and wins and then resales the property for more than the winning bid price and the foreclosure price, who gets the profit?

Pay off $28,000,  Sold for $70,000.  Big profit.

Of course most of this is governed by state law.  But in general there is a priority of creditors who get paid.  Usually it's:

1) Federal government/IRS.
2) State government claims.
3) Local taxing authority such as property tax.
4) First mortgage holder.
5) 2nd mortgages holder (if any) and so on for any other mortgages.
6) The person(s) who were foreclosed on.

Of course I think the "Sheriff" get a cut also.  There is rarely any money left for the debtor since they wouldn't have let it go into foreclosure in the first place if they had equity.

[ponti_33609]

Of course I think the "Sheriff" get a cut also.  There is rarely any money left for the debtor since they wouldn't have let it go into foreclosure in the first place if they had equity.

Agree, there is no equity in the majority of these or the owner would sell for what they could and get out.  We have purchased 4 foreclosed properties in the past 3 years and they all got the bank back approximately the same amount which was about 50% what was due to them.

It is also safer to let the bank take it back at auction rather than win the bid unless you can determine for certain what outstanding liens, HOA fees etc may be outstanding as you will get stuck paying for them.  One of the places we bought owed the HOA more than $35K. 

[rocker59]

1) If the Sheriff auction gets more for the mortgage company than the payoff of the foreclosed mortgage, who gets the profits?

2) If the mortgage company bids on the property and wins and then resales the property for more than the winning bid price and the foreclosure price, who gets the profit?

Pay off $28,000,  Sold for $70,000.  Big profit.

 
The scenario you put forward is very rare these days.  As mentioned, the bank usually loses big time on these deals.  They either take government money for the loss, or come after the former homeowner for the difference in what is owed and what the property sold for.

Who in the world would let a $70,000 piece of property go back to the bank with only $28,000 being owed?  The property owner should've put it up for sale themselves if they couldn't make the payments!


I think I would search on laws in your State.  It appears Indiana has "right of redemption", which means the owner could buy the property back by paying off the mortgage and all fees.  Somehow I doubt that the bank will be handing the owners $42,000 without a fight, though I think some States do state the owner would get any remaining proceeds.

http://www.in.gov/legislative/ic/2010/title32/

You'll get lots of hits by Googling "bank foreclosure sale laws Indiana"

[Lannis]

Who in the world would let a $70,000 piece of property go back to the bank with only $28,000 being owed?  The property owner should've put it up for sale themselves if they couldn't make the payments!

Most of the potential answers to that are not good:

1) On the run from the law.

2) Incompetent due to addiction or mental condition, with no responsible guardian.

3) Whereabouts of owner unknown.

4) Sheriff's sale due to heirs of property completely unable to agree on disposition, and not willing to pay mortgage OR sell.

Lannis

[Mayor_of_BBQ]

4) Sheriff's sale due to heirs of property completely unable to agree on disposition, and not willing to pay mortgage OR sell.

I had to do this last year, partition by co-tenant


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[Orange Guzzi]

The $42,000 question. 
Sounds like a trip to the court house.  My favorite place.


The family/husband and wife did not ask for help to clear up the mess.  Drugs were an issue.  Self employment was and issue, pride is an issue.  Shame is and issue.  Divorce is an issue.  Criminal activity, he held her against her will in the home for over a year.  Little food, no transportation, little food, no electricity or phone.

 My wife, myself and other tried to help, but she was scared to respond because of the husbands threats of harm if she reached out.   

No other debt except small amount of property tax and unpaid mortgage.  Pride and hope that something good would happen and save them.  They should feel lucky, they lived in the home for 3 years before the sheriff showed up and told them to leave.  Three years is a long time for "hope and change".