Can you buy your own home at foreclosure?

[pcn]

If it comes to the point of a foreclosure, can an owner buy the house at the auction? Assuming a benevolent investor was willing to supply financing? How would one get an idea of the ratio of value to sale price at a foreclosure sale? I'm sure there are many factors such as location, market, etc.

[justbroke]

In every jurisdiction that I know of, the owner would have to pay the redemption value which is normally the entire balance due and owing.

[pcn]

In every jurisdiction that I know of, the owner would have to pay the redemption value which is normally the entire balance due and owing.

So theoretically, someone else could buy it for a fraction of the redemption value, but the original owner would have to pay full price? A seemingly obvious workaround would then be to have a friend or relative buy it at the lower price. So what then would be the reason for the full price requirement?

Edit: After reading about AL laws it sounds like one could use redemption to their advantage. From what I read it appears to be a 1 year period where the owner could pay the foreclosure amount plus 10% to regain their home. So, in a big gamble, let the home foreclose, then use the redemption option to get it back at a discount of what was originally owed. Opinions?

[justbroke]

You'd still owe the deficiency Besides, to prevent this, most foreclosing Banks will always bid up to the current balance on the loan. Thus your "relative" would have to pay what you owe anyhow.

If the bank was asleep, then sure, your relative could purchase it for a lower price... with you still being stuck with the deficiency (difference).

The reason for the full price requirement is so that you can't game the system.

[pcn]

You'd still owe the deficiency Besides, to prevent this, most foreclosing Banks will always bid up to the current balance on the loan. Thus your "relative" would have to pay what you owe anyhow.

If the bank was asleep, then sure, your relative could purchase it for a lower price... with you still being stuck with the deficiency (difference).

1) But since we're discharged there is no deficiency, correct?
2) If the balance is over the value, then who in their right mind would bid? And then what's the point of the auction?

The reason for the full price requirement is so that you can't game the system.

Not gaming, but still trying to find options to get rid of, or reduce, our underwater 2nd and save the house. Though logic tells me the 2nd wont foreclose, their lack of interest in settling, and the "intent to accelerate" letter we got this week concerns me.

[notforsale]

You might consider a short sale to this "investor" they could write a contract then you submit it to the bank for less than you owe. You run the risk at auction of another real investor buying your house if there is equity.

[AngelinaCatHub]

I'm sorry, but location and all that stuff in the first OP post, I just don't get it. What would matter if the OP wished to buy their own home. It would be no factor.

As JB stated "gaming the system" is ringing my bell. I don't like the sounds of this and the OP has already been discharged from bk. To place a surrogate in place of the current/previous owner is tantamount to fraud and could be a nasty penalty for doing so.

I don't play this game on this Forum. We are straight up or I will not support or advise any activity that looks like, acts like, or quacks like, a sham. Sorry Charlie. 'Hub

[pcn]

Notforsale, great idea. Since this is the 2nd attempting the foreclosure, would our 1st have to agree to the short sale. And since we are paying the first, would they agree to a short sale if it would get them less than they are currently? I am unclear on how a 2nd can actually foreclose without buying out the 1st.

[pcn]

Angelinacathub, I'm not sure what exactly you are trying to insinuate, so I'll cut you some slack.

"I'm sorry, but location and all that stuff in the first OP post, I just don't get it. What would matter if the OP wished to buy their own home. It would be no factor."
Not even sure what this means.

"As JB stated "gaming the system" is ringing my bell. I don't like the sounds of this and the OP has already been discharged from bk. To place a surrogate in place of the current/previous owner is tantamount to fraud and could be a nasty penalty for doing so."
Please. Do a little research before you spout off. There is nothing illegal about bidding at your own foreclosure. It takes about 2 minutes worth of Google to get that.

Maybe you just didnt understand the original question. In that case, no offense taken.

[daytona]

"straw buyers" is the term you are looking for, and yes it happens more than you think...

[pcn]

"straw buyers" is the term you are looking for, and yes it happens more than you think...

Is there any legal issue with that, and if so, what or why? Are they used to avoid the "full price' requirement mentioned above?

[StartingOver08]

If you are attempting to buy back your own home during the short sale process, the banks (in our area like BOA/Chase/Wachovia etc) require all the parties to sign an Affidavit of Arm's Length Transaction. Right on the Affidavit it specifies that the Buyers and Sellers nor their Agents have "any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at anytime after the execution of this short sale transaction."

Then, just so everything is crystal clear, the Affidavit defines "short sale fraud":
"Further, all parties understand that short sale fraud is defined as: 'any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known." That is a pretty broad definition.

If it were me, and even if I loved my home, I would find another one to buy and not take the chance that the bank would come back later and claim short sale fraud. There are plenty of homes out there...

(BTW, here there are so many foreclosures the banks don't even bid in the amount of the defaulted mortgage anymore. They bid much, much less because the market value has fallen so far.)

[AngelinaCatHub]

If you are attempting to buy back your own home during the short sale process, the banks (in our area like BOA/Chase/Wachovia etc) require all the parties to sign an Affidavit of Arm's Length Transaction. Right on the Affidavit it specifies that the Buyers and Sellers nor their Agents have "any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at anytime after the execution of this short sale transaction."

Then, just so everything is crystal clear, the Affidavit defines "short sale fraud":
"Further, all parties understand that short sale fraud is defined as: 'any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known." That is a pretty broad definition.

If it were me, and even if I loved my home, I would find another one to buy and not take the chance that the bank would come back later and claim short sale fraud. There are plenty of homes out there...

(BTW, here there are so many foreclosures the banks don't even bid in the amount of the defaulted mortgage anymore. They bid much, much less because the market value has fallen so far.)

PCN, this is what I was attempting to say, but 'Startingover' said it much better. No offense taken and no offense meant.

There is a situation called "Appearance of guilt" in that your question "appeared" to look like a constructive attempt at pulling strings to get a deal.

I don't blame you for wishing to recover from a bad situation, but there is "nothing new under the sun" and you would present yourself to a lot of legal issues and more stress if not embarrassment. I would not want that to happen to anyone who has survived bk as we all have had enough stress for a lifetime here.

Consider Startingover's suggestion to purchase at auction any house but your old one.

Please don't take my comment as malicious. It was not meant to be. 'Hub

[Tom_Mi]

If you are attempting to buy back your own home during the short sale process, the banks (in our area like BOA/Chase/Wachovia etc) require all the parties to sign an Affidavit of Arm's Length Transaction. Right on the Affidavit it specifies that the Buyers and Sellers nor their Agents have "any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at anytime after the execution of this short sale transaction."

Then, just so everything is crystal clear, the Affidavit defines "short sale fraud":
"Further, all parties understand that short sale fraud is defined as: 'any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known." That is a pretty broad definition.

If it were me, and even if I loved my home, I would find another one to buy and not take the chance that the bank would come back later and claim short sale fraud. There are plenty of homes out there...

(BTW, here there are so many foreclosures the banks don't even bid in the amount of the defaulted mortgage anymore. They bid much, much less because the market value has fallen so far.)

Good information. I have a question. Most people here that object are referring to the owner grabbing it at sheriff sale.

But what if you wait out redemption and the bank now owns the note? After redemption, you've vacated and they list it. Would all that 'arms length' language be in a purchase agreement once the note is owned by the bank?

Even if it is, the post-redemption homeowner is neither seller nor seller's agent, correct?


-t


As for 'gaming the system', the OP has already been through bankruptcy and these days it happens because some institution (health ins co or bank) drove them to it. Since the system makes a lot of money 'gaming the consumer', I have no problem with the consumer exercising any similar rights they're entitled to within the law.

[AngelinaCatHub]

Good information. I have a question. Most people here that object are referring to the owner grabbing it at sheriff sale.

But what if you wait out redemption and the bank now owns the note? After redemption, you've vacated and they list it. Would all that 'arms length' language be in a purchase agreement once the note is owned by the bank?

Even if it is, the post-redemption homeowner is neither seller nor seller's agent, correct?


-t


As for 'gaming the system', the OP has already been through bankruptcy and these days it happens because some institution (health ins co or bank) drove them to it. Since the system makes a lot of money 'gaming the consumer', I have no problem with the consumer exercising any similar rights they're entitled to within the law.

I agree with your last paragraph once you included "within the law".

Now under the circumstance that you listed in your post. I believe it would be business between you and the bank. If they agreed, and you agreed, there would be no legal issue. To yank it at sale is the issue as it would be not known to the mortgage company. But once settled in foreclosure, it would not be an issue as all is in the light of day. 'Hub