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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Another helping of help. Posted by Steve H. on September 01, 2001 at 1:22 PM In Reply to: Re: Another helping of help. posted by Ward-CA- on September 01, 2001 at 8:50 AM : : Someone else posted that the second and third might bid up to the value of their interest in the property, plus that of senior liens. You seem to think that they wouldn't bid, which was what I was figuring, especially considering that the market is so depressed here. Any additional comments on the second or third bidding? : : One final question. I did not find any evidence that the second had been released, but the trustee in bankruptcy said they only two loans listed on the home - $430 and $143. If that were true, is it more likely the second would bid? : : Steve : =•=•=•=•=•=•=•=•=•=•=•=•= : Steve, is the $143K second trust deed one that’s been put in place by a regular lender? Or is the lender a private party? The reason is that a private party junior will rarely bid at the trustee’s sale of a senior. If it’s overbid by a junior lienor it’ll be because the junior beneficiary is a seasoned, institutional lender with some moxie. : And in this instance, where the 1st is so large, I would bet that only an outside bidder would be doing the bidding. And now that you mention that your local real estate market is depressed please forget my earlier comments regarding amateur competition. They’re a factor only in a real estate market dominated by sellers, such as our current San Diego market. : I hope you avail yourself of your county recorder’s records and research this deal there to determine with some certainty that the liens against this property are all that are against the title and that they’re in the priority order you currently think they are. : My guess is that the 2nd of $143K will be the one that initiates the foreclosure on this property. I say that for two reasons. First, the 2nd will want to get its foreclosure going earlier than the 1st’s so they won’t have to cure the 1st’s foreclosure in order to ensure that their 2nd lien goes to foreclosure sale first. Second, the bankruptcy court historically allows the junior lienors, like the 2nd in this case, their relief from the automatic stay of bankruptcy, to initiate and conclude their foreclosure long before the Court will grant relief to any 1st lender. Why? Because the 1st isn’t being threatened with getting squeezed out of their protective equity from the ever growing amount of interest owed to the 1st lender—but the junior lien positions are. : : Hope this helps. Ward - This is a great help. I've been trying to get a handle on this whole situation for over a month, talking with lenders, bankruptcy attorneys and real estate agents. My wife and I really want this house, as it works really well for our family, but it seems every path to getting the house is fraught with some kind of impediment. I'm intrigued by your comments about the junior lienholder(s) getting a special advantage in bankruptcy - almost everyone else I talked to assumed that the first would foreclose, and that the junior(s) would likely take a walk. The $143k note may be the second or third. There was a $49K note after the first, and our research does not show a release of that lien. However, it's possible that the owner used part of the $143K third to pay off the second, making the $143K the second. We'll need to try to do some more work at the courthouse on that. The first is to Wells Fargo, the second is to Compass Bank and the third (or second) is to Banc One. We called Wells Fargo to inquire about the situation and were referred to the website of PASREO (Premiere Asset Services REO), which appears to have some affiliation with Wells Fargo - at least the e-mail address was ***@wellsfargo.com. I was thinking about a "day after" offer to Wells Fargo, but the direction we got seemed to suggest that the property would move directly to this REO service after auction. Am I wrong in thinking that this is so? How do you contact the bank the day after? How can you find out who was the high bidder? If you think it's likely the second (or third) will bid at auction, we're probably in trouble. We don't really have much cash to put towards the deal, and in this county, you have to pay the full amount in cash by 2PM the day of the sale. It's been suggested that we could arrange for financing with a typical lender prior to the sale (paying for our own appraisal and title work), get a letter of intent from them to loan us a certain amount, and then take that letter to a prearranged financial institution who would be willing to cut us a cashiers check that day for amount of the winning bid, assuming of course that we won the auction. Then, we'd arrange for the lender to pay off the bank in a week or so. I've been told "this is possible, but very complicated to pull of." The other possibility is to work with a service call ecountyforclosures.com. I assume you've heard of them. They will provide not only the bidding expertise, but the financing (97-100%) as well. Effectively, they buy the house at auction at no more than your max bid, and you buy from them. However, they charge 10% (of your max bid) commission and a non-refundable 1% "walk-away" option fee. We've seen the house - it's in great shape, is unoccupied and in a gated community, so we don't need the option. Anyway, the main problem with them is that the 10% commission greatly reduces the amount of money we can afford to bid on the house. Plus, if I go this route, I'll be owning this new house and my old one at the same time (of course, we'd list right away), which means I can only qualify for enough of a loan to bid about $500k. If you're correct about the third (or second) bidding, then we're probably out of the game before it starts. The real frustrating thing is that the owner never even considered a short sale, which might well have worked. They had the house listed at $660K, which was supposedly what they needed to get out even. We bid $600K (contingent). We'd have picked up the back taxes, and they could have cleared the first, second and over half of the third. Hell, the realtor was even willing to cut their commission in half. I recently tried to call the trustee to see if she will allow us to try to work through this with the owner and lenders, but she hasn't called back and I doubt she will. So, if you think that the bid on this house at auction will exceed, say, $520K, we'll probably not bother and try to do something after the sale. It's a great house that would appraise close to $700K. The only reason it hasn't sold is the market and the fact it has a rather unique custom floorplan that turns a lot of people off. Thanks again for your sage advice. Steve Follow Ups: Re: Now let's see... Ward-CA- 4:53 PM, 09/02/01 (4) Porucznik Borewiczmnb Porucznik Borewiczmnb 5:09 PM, 07/25/06 (0) Re: Now let's see... Steve H. 7:38 PM, 09/02/01 (2) Re: Fingers crossed... Ward-CA- 8:10 PM, 09/02/01 (1) Re: Fingers crossed... Steve H. 10:55 AM, 09/04/01 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : : Someone else posted that the second and third might bid up to the value of their interest in the property, plus that of senior liens. You seem to think that they wouldn't bid, which was what I was figuring, especially considering that the market is so depressed here. Any additional comments on the second or third bidding? : : : One final question. I did not find any evidence that the second had been released, but the trustee in bankruptcy said they only two loans listed on the home - $430 and $143. If that were true, is it more likely the second would bid? : : : Steve : : =•=•=•=•=•=•=•=•=•=•=•=•= : : Steve, is the $143K second trust deed one that’s been put in place by a regular lender? Or is the lender a private party? The reason is that a private party junior will rarely bid at the trustee’s sale of a senior. If it’s overbid by a junior lienor it’ll be because the junior beneficiary is a seasoned, institutional lender with some moxie. : : And in this instance, where the 1st is so large, I would bet that only an outside bidder would be doing the bidding. And now that you mention that your local real estate market is depressed please forget my earlier comments regarding amateur competition. They’re a factor only in a real estate market dominated by sellers, such as our current San Diego market. : : I hope you avail yourself of your county recorder’s records and research this deal there to determine with some certainty that the liens against this property are all that are against the title and that they’re in the priority order you currently think they are. : : My guess is that the 2nd of $143K will be the one that initiates the foreclosure on this property. I say that for two reasons. First, the 2nd will want to get its foreclosure going earlier than the 1st’s so they won’t have to cure the 1st’s foreclosure in order to ensure that their 2nd lien goes to foreclosure sale first. Second, the bankruptcy court historically allows the junior lienors, like the 2nd in this case, their relief from the automatic stay of bankruptcy, to initiate and conclude their foreclosure long before the Court will grant relief to any 1st lender. Why? Because the 1st isn’t being threatened with getting squeezed out of their protective equity from the ever growing amount of interest owed to the 1st lender—but the junior lien positions are. : : : : Hope this helps. : Ward - : This is a great help. I've been trying to get a handle on this whole situation for over a month, talking with lenders, bankruptcy attorneys and real estate agents. My wife and I really want this house, as it works really well for our family, but it seems every path to getting the house is fraught with some kind of impediment. : I'm intrigued by your comments about the junior lienholder(s) getting a special advantage in bankruptcy - almost everyone else I talked to assumed that the first would foreclose, and that the junior(s) would likely take a walk. : The $143k note may be the second or third. There was a $49K note after the first, and our research does not show a release of that lien. However, it's possible that the owner used part of the $143K third to pay off the second, making the $143K the second. We'll need to try to do some more work at the courthouse on that. : The first is to Wells Fargo, the second is to Compass Bank and the third (or second) is to Banc One. We called Wells Fargo to inquire about the situation and were referred to the website of PASREO (Premiere Asset Services REO), which appears to have some affiliation with Wells Fargo - at least the e-mail address was ***@wellsfargo.com. I was thinking about a "day after" offer to Wells Fargo, but the direction we got seemed to suggest that the property would move directly to this REO service after auction. Am I wrong in thinking that this is so? How do you contact the bank the day after? How can you find out who was the high bidder? : If you think it's likely the second (or third) will bid at auction, we're probably in trouble. We don't really have much cash to put towards the deal, and in this county, you have to pay the full amount in cash by 2PM the day of the sale. It's been suggested that we could arrange for financing with a typical lender prior to the sale (paying for our own appraisal and title work), get a letter of intent from them to loan us a certain amount, and then take that letter to a prearranged financial institution who would be willing to cut us a cashiers check that day for amount of the winning bid, assuming of course that we won the auction. Then, we'd arrange for the lender to pay off the bank in a week or so. I've been told "this is possible, but very complicated to pull of." : The other possibility is to work with a service call ecountyforclosures.com. I assume you've heard of them. They will provide not only the bidding expertise, but the financing (97-100%) as well. Effectively, they buy the house at auction at no more than your max bid, and you buy from them. However, they charge 10% (of your max bid) commission and a non-refundable 1% "walk-away" option fee. We've seen the house - it's in great shape, is unoccupied and in a gated community, so we don't need the option. Anyway, the main problem with them is that the 10% commission greatly reduces the amount of money we can afford to bid on the house. Plus, if I go this route, I'll be owning this new house and my old one at the same time (of course, we'd list right away), which means I can only qualify for enough of a loan to bid about $500k. If you're correct about the third (or second) bidding, then we're probably out of the game before it starts. : The real frustrating thing is that the owner never even considered a short sale, which might well have worked. They had the house listed at $660K, which was supposedly what they needed to get out even. We bid $600K (contingent). We'd have picked up the back taxes, and they could have cleared the first, second and over half of the third. Hell, the realtor was even willing to cut their commission in half. I recently tried to call the trustee to see if she will allow us to try to work through this with the owner and lenders, but she hasn't called back and I doubt she will. : So, if you think that the bid on this house at auction will exceed, say, $520K, we'll probably not bother and try to do something after the sale. It's a great house that would appraise close to $700K. The only reason it hasn't sold is the market and the fact it has a rather unique custom floorplan that turns a lot of people off. : Thanks again for your sage advice. : Steve Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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