mortgagee in possession

[spooky]

Hi All
If a bank has reposessed a house and the current market value is $300,000 but the original loan was say $200,000 and is going for auction unless sold prior.

Q. 1 Will the bank sell for a little over $200,000 ie with enough to cover their costs?
Q.2. Will the bank sell for whatever they can get at auction and pocket the capital gain themselves or does this go to the original owner?

 

[Sunstone]

Dear Spooky,

In answer to your question (really one question) the bank has a legal obligation to get the best price for it. That means that thesedays more often then not banks choose not to take responsibility in making a decision on the price and simply put it out to auction.

Sales price
-Pay agents commission
-Repay bank loan
-Pay all bank charges and penalties

Whatever is left over is legally required to be returned to the original owner.

Most mortgagee in possession auctions that I have been to, have sold for a higher price than better properties just around the corner sold by private treaty. People think they are going to get a great deal through all the US books they have read on foreclosures but the increase in competition and perception that it MUST be a bargain causes it to become overpriced. You also have the risk of unknown caveats that you are not protected from when buying at a Mortgagee in Possession auction.


The three "D's" - De Bank, Divorce and Deceased Estate/Death do present opportunities but for "De Bank" there are limited opportunities at the moment. This will change in a less heated (and higher interest rate) market if a property has not been marketed properly.

Cheers,

Sunstone.

 

[asy]

Originally posted by spooky
Hi All
If a bank has reposessed a house and the current market value is $300,000 but the original loan was say $200,000 and is going for auction unless sold prior.

Q. 1 Will the bank sell for a little over $200,000 ie with enough to cover their costs?
Q.2. Will the bank sell for whatever they can get at auction and pocket the capital gain themselves or does this go to the original owner?

Hiya Spooky...

I did a post on this a few months ago... It's HERE!
Please let me know if this doesn't answer your question, I will try again!!

hope it helps

asy