Foreclosure Surplus funds?

[Mikey Cas]

Hi everyone, I recently heard about a method some investors are using. It involves attending foreclosure auctions and identifying any properties that sell for a surplus over the mortgage, lien and junior liens. This amount is due back to the original homeowner, but many times they never know this money is theres and never receive it. The idea is to find these people and charge them a percentage of the surplus or an agreed amount. This sounds pretty interesting to me and was wondering if anyone has any experience in this.

Also, I went to the local county court house, to find out when the next auction was. I asked somebody and they told me to look at a sign and there were a couple of notices, but Is there a better way to find how much is owed on the mortgage and dates of auctions in a more organized fashion? Thanks for any help!!

[Nina Grayson]

My team works with Pre-foreclosures to help homeowners walk away with some of their equity or a share of the ARV in a Subject To, or a lease option to avoid foreclosure. The options we provide also help them with not having a negative public record on their credit reports, reducing their credit score, and preventing them from having to wait a minimum of 3 years to apply for a loan, even if they could qualify at that time with a low score. They get to walk away with some cash and make a fresh start. However, not all Pre-foreclosure homeowners see the help staring them in the face. They try to do Loan Mods only to find out they have to keep applying because the asset manager makes the approval process difficult so they get paid for every Loan Mod application. They try to do bankruptcy, but that only gives them 6-8 weeks of postponement and they can only do so many change of court dates before they are denied any further changes and have to go to court. By that time, they don't have the funds to pay the default and additional fees to reaffirm the mortgage to keep the home, so the property is seized.

Bottom line, many Pre-foreclosures in CA go to foreclosure because the owner is hoping for a hail-mary other than the one we give them.  We track all of the owners we speak with and for those that go to foreclosure, we review what it sold for to see if it sold for more than the default amount and additional fees.  If we see surplus funds of at least $20k, we reach out to tell them we can consult with them to get the surplus funds to them and we coordinate with the attorney to do so.  The attorney is the one paid the fee and we are paid from the attorney's fee.  Because we have the relationship with the owner, especially since they've met us and spoken with us on several occasions during the Pre-foreclosure, they are open to working with us.  Yes, there are hoops, and each state has specific laws and requirements, but it is a viable business if you do it with the intent to help those you have an established relationship with and you are not charging them some ridiculous fee.  

Disclaimer:  I am not providing any legal advice in this post.