Purchased a HOA foreclosue, now what?

[Tammy Spearman]

We are in FL. Without knowledge purchased a HOA foreclosue with a 1st lien. The 1st lien is in pre-foreclosure. The homeowner's were in the process of negoiating a loan mod so the foreclosue is on hold. I dont think the bank knows about the HOA foreclosue. The homeowner has left the property. How do we negoiate with the bank to rid the 1st lein? It is a Fannie Mae backed loan with BofA. Is it possible to make an offer to buy the note from Fannie or BofA? Any tips, ideas, etc?
Thank you.

[Jon Holdman]

I would strongly recommend you do two things.

One is to have a title company run a title search on this property to find out exactly where you stand. You really should have done that before the auction, which I think you now realize.

The other is that you should hire a lawyer knowledgeable in FL foreclosure law. At the very least, do an initial consultation (sometimes free) and see if anyone is interested in taking your case.

There's a real possibility what you bought is worthless. If you have really won an auction (more below) for a second position lien, then you have possession of the property. However, you are also now on the hook for any superior liens. You'll need to pay those off to get a clear title, and if they're more than the property is worth then that wouldn't be worthwhile. If they're less, then you still have to come up with the money to pay them off.

If you're in a superior position, then the junior liens will be wiped out by the foreclosure.

You say "I dont think the bank knows about the HOA foreclosue." That's really bad, but might just save your bacon. When a foreclosure occurs, ALL relevant parties must receive notification. If the BofA wasn't properly notified, then the foreclosure you won may be void. If that's the case, the whole HOA foreclosure should be unwound.

This is why you really MUST get a lawyer involved so you can find out what's really going on.

Here in CO, HOA liens are funny things. A portion of the lien, up to some amount, is very high in the food chain, even before any first mortgages. If the lien exceeds that threshold (a few grand, IIRC) then the rest of the amount is in a very junior position.

Certainly an entity like BofA that holds a (presumably) relatively large mortgage (relative to the size of the HOA lien) on a relatively valuable property is not going to just roll over and let you have to property. Lawyer up.