Bank bought my home at Auction - what does this mean

[sunflwrgrl13]

We filed our BK7 last Nov and were discharged this past Mar 2011. We received notice that our house was to be sold on Aug. 17th. After the auction, we received a letter from Wells Fargo saying they had purchased the home - I guess because no one else wanted it. Does this remove us from the deed or are we still considered the owners until a person (not the bank) buys it? I ask because I want to know if we are still liable for paying taxes, having the grass cut, etc.

I also received a letter saying WF had put insurance on it, and that we are still required to have insurance. We have abandoned the property and couldn't put insurance on it if we wanted to since we no longer live in it. Should we be concerned about being pursued for lack of insurance?

Our 2nd mortgage lender, BoA, keeps sending monthly statements as well. Can they get away with continuing to send them to us? Should I call them to tell them that Wells Fargo bought the house at auction so they know who to contact instead of us?

Or overall, should we just not be too terribly concerned about any of it because we are actually moving overseas? My husband is already there, and I'm leaving in a month, so to be honest I really don't care about any of this, but I don't want to find out later on about something that could bite us in the ass.

[Guest123]

You should be able to check on the county assessors website if they have one, or you could call. But as soon as your name is off the deed you are free of it. So I think it is as soon as the deed is recorded....but I could be wrong. If any one knows for sure please correct me, as I have a house going to auction soon.

[TBA]

If your house was sold on the courthouse steps (so to speak), i would assume you are no longer liable for anything to do with your house. Why do you need insurance if you no longer own your home.

It is not uncommon for a bank to buy your house at sale. They usually bid $1.00 to keep taxes/doc stamps low, and if no one wants to bid against them (this usually happens when there is no equity in the home, especially right now in these troubled real estate times), they get the house for $1.00. Of course, they also hold the lien against the house, so the lien is wiped, so to speak. If someone else purchased the house at sale, they could bid $2 - usually the bank would then just bid the balance of the loan amount (and back in the day when there was equity in our properties, someone else would bid $1 above the loan balance, and could buy the house - the purchase price would go to pay off the lien to get clear title).

I would question who sent you the letter that said you must maintain insurance on the property. Insurance companies hate the double insurance issues - WF is the owner and holds ins and then you still hold ins. Who does someone sue? Both of you. Which insurance company pays? Neither of them - they fight over who is supposed to pay. We had this issue with our business - We had standard commercial property insurance for the building and liability insurance through someone else because we couldnt get liability based on the type of industry we are in. My parking lot, and any issues that occurred in it fell under that "double insurance" area, and we had to get special underwriting to remove it from one of the policies.

I agree with the above poster - check with the assessors office, also check with the recording department - this is usually a totally different area (if it just happened, depending on how backed up your county is). Once the bank buys your property at sale, they own it. I would assume all of your liabilities cease at that point.

But i would still double check with your bk attorney, as i am not one.

[vegaslaw]

Interesting, banks generally don't bid $1.00 in Nevada. They generally try to credit bid up to the value of the loan.

[TBA]

What is a credit bid? How does that impact the doc stamps/etc? The one dollar would be paid to the clerk - and taxes and fees would be based on the sale price of $1.00. I always thought it was odd too - but its how the banks would do it here to keep costs low.

During the boom, it was not uncommon for people to do closings on a boat 3 miles offshore (int'l waters) to avoid paying state taxes on big ticket houses.

I havent been to a sale in years though, especially since the crash of the real estate market, so they may be doing credit bids now, whatever those are?

[justbroke]

I call the "credit bid" funny money. The lienholder is allowed to bid up to the value of their lien (balance of loan) without actually shelling out any money! Typically, the bidding will actually starts at a particular value. If it starts at $1, then the lienholder will bid $1. In North Carolina, I've seen the lienholder open the bidding at what they consider "fire sale" market value. This scares away all the would be "$1" bidders.

The lienholder can then, bid up to the mortgage value. In the current market, almost all foreclosures are on homes that are underwater, so the lienholder has a lot of funny money to play with (credit bid).

It would be interesting to discuss "market value" and any deficiency created. In most States, you can argue that any deficiency created by the bank purchasing the home (REO) was not "market value" and present evidence of market value. This could cause trouble for banks if the bid $1. Additionally, it's probably easier for the bank -- foreclosing entity -- to just bid the "fire sale" market value at auction... as that will certainly scare away most "investors".

(Also, in many States, the creditor must bid an "honest" fair market value for the property. They can't just bid $1.00.)

[TBA]

That makes sense. I think its just semantics - for the most part.

During the boom, people would learn who represented the banks and what they could and couldnt get away with as far as bidding. the experienced reps for the banks would bid one dollar - and unless you were going to offer more than the loan value, people wouldnt bid against them. It was a circle of pretty consistent people here, so it could be that everyone knew everyone and knew how they would bid. The transaction would not be considered at arms length, so the sale price would not be considered when calculating appraisals, etc.

It did keep fees much lower for the banks though. But like i said, i havent been to a sale in some time. I wouldnt know anyone anymore.

As an aside, for quite some time, my company that i work for now was actually working the back side of these sales when there would be an "overbid." The excess money would go to the county and the owner would have two years to collect the amount that was paid over and above the liens/fees/etc, before it escheated to the county. Obviously that part of our business has gone away.