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Posted by Bill H on May 28, 2007 at 20:56:02:
In Reply to: Trustee sell next week...any way to save my equity? posted by Mike on May 28, 2007 at 18:34:59:
You posted.....My house is set to be auctioned with the public trustee on 6/5/2007 (next week). The fair market value for my house is around the 500k mark......All well an good...BIG question is what will it sell for in today's downward spiraling market?
The balance of my first mortgage is around $265,000, and I have a 2nd that is about $120,000.
This means you now owe over $400,000 and change counting all the foreclosure, late, attorney, etc., fees that will be added in at the sale. Your equity position has changed dramatically.
The first mortgage company has filed for foreclosure, while the 2nd has remained fairly quiet.
If the first continues with the sale. The 2nd will be wiped from the title and there will be an immediate additional $120,000 in equity...probably have bidders at the sale. May be some representing the 2nd.
Lenders are not as dumb and some give them credit for being. Countrywide has one of the largest data bases of housing in the marketplace. They probably looked at it, saw their position, realized the value of the property versus their lien and realized that they may well be made whole as a result of the sale. They are NOT concerned or worried about the junior lien holders.
So have I lost everything at this point?....Have to face the harsh reality that this is about what is going to happen. Unless it gets bid really high both you and the 2nd TD holder are down the tubes.
Simple numbers...if it sells at auction for say $400,000 and that is a BIG IF..the funds would be 265K plus costs to the 1st TD, 120K plus costs to the 2nd TD...anything left...if there is any...to any other liens or charges against the property and you get the final amount.
I'm in Colorado and I know there is a 75 day redemption period so I am going to attempt to sell the property but it is a very slow moving market and I have serious doubts about being able to sell it in that time frame but I'm still going to try, but I have a few questions hopefully someone can help me with.
What happens with the 2nd if I am able to sell during the 75 days?....You will have to pay the 2nd from the proceeds of the sale....Unless they agree to take less or you find someone willing to take on this lien.
I understand that after the sale the 2nd is wiped out from the property itself but still attached to me.....that is correct...it becomes and unsecured debt...they will probably turn it to a collection agency and you will get hounded until you settle with them.
I assume it would still have to be paid at closing but I don't know for sure how that works....Yes, all liens have to be paid at closing unless the buyer agrees to accept it subject to the existing liens.
What are the chances of the 2nd mortgage company bidding at the sale given the numbers and situation?....If the property is worth what you say, the market for this level is moving, and the 2nd feel comfortable that they can recoup by bidding they may step in and bid up to a certain amount to protect their position.
Is a short sale even feasible in this situation?.....Priobably not unless there is a compelling reason for it....Overpriced, no equity, hardship, lost job, etc....Is there one?
I keep reading that short sales are good if one owes more than the property is worth, but a few months ago I contacted a company that buys houses and they wanted to do a short sale, but after learning I would walk away with nothing I refused to do it......Look at the logic of this...why would the lender give up their funds just so you can have yours....lenders will not short their position if you are making $$$. At best most will aloow you a small amount for moving expenses.
But if it came down to it I would much rather short sell it to a friend for the $265,000 than let the bank get it for that....I'd forget this magic $265,000 number...it will now be close to or over $300,000 including all the foreclosure costs. And, the only way you can sell it for this amount is to get the lender (in this case the 2nd) t
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