Help me understand

[Jennifer A.]

I have bought one property at foreclosure and attended many, many more. I'm trying to understand something though. If your house is valued at $280,000 (and I believe it to be north of $250,00 based on my knowledge and experience in the area) and you are being foreclosed on for $100,000 why don't you at least try to sell it? There is one house in particular that this is happening for but I've seen it in several cases. In the instant case, there are no other mortgages or liens or judgements. I've done the title work. There has to be a reason they don't sell for at least $200,000 (it would go in a day, guaranteed).

I'm just trying to understand.

[Mary B.]

Is this a short-sale property that you are referring to? If so its a bank thing. All they are concern with is the defaulted amount. Usually there is equity in the property. Yet if the owner owed $80K(defaulted amount left on mortgage) on the $250K(orig purch price) house that may appraise for $280K the house may be up for sale for $105K(which includes attorney fees & other bank fees). The banks want to get rid of that bad paper. After the foreclosure goes through the bank usually waives those ramped up fees and just focuses on the note but at a discount. They discount the $80K debt because its not attached to anyone and they need to make money. Banks can't make money on vacant property. Once the owner has defaulted for say 3 to 6 months its not just up to the owner because the lienholder trumps them. Even if somehow the owner gets the monies in full ready to pay the bank the wheels are already in motion and the banks won't stop the foreclosure process. Unless the seller has gotten professional legal assistance to intervene on their behalf. Any pre-foreclosure property being offered for sale by the owner has to get the approval of the bank no matter what. The seller may be ok with the offer price but the bank disapproves so the sale won't go through. Its the longest process to purchase property yet its called a short-sale. My guess is because the owner or buyer is coming up short compared to the note or/ and appraisal value. Sorry I was a little stretched out on my explanation but hopefully it helps.

Kudos,

Mary