Buying subordinate liens at foreclosure auctions

[Evan Gater]

Hello,

I reside in Orlando and I'm currently exploring properties in Florida. I am contemplating the possibility of purchasing a second mortgage or an HOA lien to subsequently pay off the superior lien. How does the process involved in paying off the superior lien work? Is it typically straightforward to make such payments, or is there a chance that the bank might refuse payment and proceed with an auction?

Furthermore, I'm curious about the level of risk associated with this process. Would you recommend investing in subordinate liens?

Thank you very much in advance,

[Wayne Brooks]

@Evan Gater
1-no,surplus does not go to the hoa debt…it only goes to 1) any debts junior to the debt foreclosing or 2) the owner

2-yes, the first can be paid off up until the 1st foreclosure auction. It could take a month to get them paid off.

3-no, you are a “debtor in possession” and by law they must give a pay off, and accept it.

4- no. You can guess at it. The foreclosure file may show when the last payment was made, but it was at least 120 days before the filing. You then estimate accrued interest, add some more for fees, a few thousand for foreclosure fees, a few thousand for force placed insurance,check to see if the lender paid taxes, etc.

5- the hoa fees can be hard to estimate also. There doesn’t have to be a lien filed, but if it is, it should detail when the non payment started. Then, the same as for the first….total amount of hoa fees owed, a few thousand for attorney fees.

Understand that very few of these will have any equity and if there is, the pros that analyze and bid at these auctions Every Day, know how to do the math too. There is no strategy they don’t already know.