Do Lenders underbid at sheriff sale?

[Tom_Mi]

I found a discussion among realtors at Trulia. One was saying that a homeowner owed 227k, and that the lender bid less. (about 100k).

The realtor sold it for 150k, and the homewoner was able to keep the difference. (50k - assuming they only had to cover the sheriff amt).

Is this realistic? I always thought banks bid the loan amount and that sheriff sales were largely administrative process.

[DeadManCrawling]

Tom,

I have not heard of anything happening in foreclosures like described. I would love for it to be true, but it makes no sense, unless the homeowner had a large amount of equity.

As described in your post, I think every person in America that is underwater would have a huge incentive to head into foreclosure. I know that it would be great, from my perspective, to hope the bank underbid, then sold for more than their bid, and WE got to pocket the difference.

I don't think I have ever heard of this happening, at least not as described on the Trulia site.

[justbroke]

I've never heard of the debtor getting the proceeds from any sale that's less than the balance on the mortgage due and owing prior to the Sheriff sale.

However, the creditor usually bids only what's "necessary" to fend off low-bidders at the Sheriff's sale. The first lien holder -- these days -- usually doesn't need to bid the actual property value or the mortgage balance in order to win. The lender is just there to weed out the low-bidders.

[Tom_Mi]

Frankly, I don't really care about selling for more.

I'd just like the bank to bid low enough that I could spend my 6mo redemption period finding a lender.

The bank is going to lose tons anyhow. They can lose it after they sell it, or they can lose a little less during redemption.

[Mensa1]

You are in Mich and I am not, so I am not conversant with their foreclosure laws.

You are talking about redemption and the price you might need to pay. Does that number somehow correlate to the lenders bid amount at sheriff sale? That would be unusual, if it did.

Assuming there is no connection between the lender bid and redemption price... and lets use your example of the lender owing 227K. Lets say they bid at the sale 10K (ridiculous amount), and someone else bids 20K, the lender bids 30K, and so on... untilt he lender ends up buying the property for 60K total bid. The lenders investment or "at-risk" amount is still 227K. So their final bid amount is really immaterial; (unless Mi law gives you some redemption price based on the final bid price).

[HakunaMatata]

Frankly, I don't really care about selling for more.

I'd just like the bank to bid low enough that I could spend my 6mo redemption period finding a lender.

The bank is going to lose tons anyhow. They can lose it after they sell it, or they can lose a little less during redemption.

You're entitled to the Redemption Period (commonly six months in Michigan) regardless of the bid amount. Michigan introduced new Public Acts late last year that can delay foreclosure by three months. I made one simple phone call and stalled my foreclosure for 90 days. This may be helpful if you're looking to buy time.

[madbuda]

Michigan introduced new Public Acts late last year that can delay foreclosure by three months. I made one simple phone call and stalled my foreclosure for 90 days. This may be helpful if you're looking to buy time.

Could you share what you did or who you called to get this delayed in michigan??

Thanks

[HakunaMatata]

You will receive information from your lender's attorney. Essentially, Michigan is encouraging lenders to offer modification options. I surrendered my property in BK; and, I have no intentions of remaining. However, I took advantage of this opportunity.

The attorney will contact you informing you of your status and include information on your rights to attempt a modification (you will receive a list of local housing counselors). Past attempts at modifications directly with your lender have no bearing on your right to pursue modification.

You don't have to pursue a modification; although, if you request modification negotiations within 14 days (of the date of notice, not the date you receive it), your foreclosure proceedings are delayed by three months. Typically, financial information is submitted to the attorney and a modification appointment is set (a housing counselor can attend). In my case, I received the paperwork and neglected to complete and return it. My foreclosure is still delayed by 90 days. One simple phone call did it for me.

If a modification is reached, foreclosure ceases provided you satisfy terms of the agreement. If a modification isn't achieved, foreclosure will commence. However, if a modification isn't reached and you meet modification criteria, the foreclosure will become judicial instead of non-judicial (which extends the Redemption Period).

http://www.berrymoorman.com/publications/2009/michigan-foreclosure-law-and-loan-modification.php

[Tom_Mi]

My last payment was sept5. No information on sheriff sale yet. I got a letter in late Nov saying I was in default, and it had a footnote about "call hud if you want a counselor". but it wasn't certified, so I didn't know if it was the 'official NOD'.

They just changed my servicer to SLS, so I'm about to call them again about a mod (which will be immediately denied over the phone per the foreign investor - so they say).

[brad10281]

You will receive information from your lender's attorney. Essentially, Michigan is encouraging lenders to offer modification options. I surrendered my property in BK; and, I have no intentions of remaining. However, I took advantage of this opportunity.

The attorney will contact you informing you of your status and include information on your rights to attempt a modification (you will receive a list of local housing counselors). Past attempts at modifications directly with your lender have no bearing on your right to pursue modification.

You don't have to pursue a modification; although, if you request modification negotiations within 14 days (of the date of notice, not the date you receive it), your foreclosure proceedings are delayed by three months. Typically, financial information is submitted to the attorney and a modification appointment is set (a housing counselor can attend). In my case, I received the paperwork and neglected to complete and return it. My foreclosure is still delayed by 90 days. One simple phone call did it for me.

If a modification is reached, foreclosure ceases provided you satisfy terms of the agreement. If a modification isn't achieved, foreclosure will commence. However, if a modification isn't reached and you meet modification criteria, the foreclosure will become judicial instead of non-judicial (which extends the Redemption Period).

http://www.berrymoorman.com/publicat...dification.php

This is great information, thanks for posting! Looks like I can look forward to 9 months of saving instead of just 6.