Understanding County Auction Results

Foreclosures
15yFollow

Understanding County Auction Results

Leslie Shapiro
chicago, IL · Member since 2011 · 2 posts · 0 votes

Hello all,

I'm hoping to pick your brains about some things I don't understand when researching foreclosures, particularly county foreclosure auctions.

What I *think* I understand so far is that typically the bank ("Plaintiff") ends up being the highest bidder and taking back the property. For instance, Beaufort County SC had sales last month, one of which is listed this way:

Case No (xxxx)
Case Name (x vs. x)
Bidder: Plaintiff
Bid Amount: $2500
Lawyer Name, TMS, Address

Then we come to two columns that I don't understand: Deficiency (options here are "Demanded" or "Waived") and "Judgements" which is a $ amount.

So, in the case above, the Deficiency was Waived and the Judgement was for $85,453. What should I conclude from this? The bank Plaintiff now owns the property for the purchase price of $2500 so they are writing off the difference between judgement and purchase price? How does Waived/Demanded fit in?

I'm also curious about Case #2: a house with a judgement of $247993, Demanded. The winning bidder was not the Plaintiff but, I assume, another lienholder (a bank name). They bid higher than the amount demanded, to $261,269. Why?

Sorry so long. Most of this will probably become clear once I get the Demanded/Waived distinction. I've searched this site all day and couldn't find it - and of course googling anything about foreclosures just leads to tons of paid sites. Your expertise is much appreciated!
:D

0Reply
31 views

3 Replies

Jump to latestLatest
  • Bryan Scott
    Investor · Castle Rock, CO · Member since 2011 · 107 posts · 65 votes
    15y

    Leslie, Short answer (from the perspective of a Colorado Realtor/Investor) is: Case #1: The Plaintiff now has a lien equal to the deficiency balance of $85,453 + the $2,500 bid price against the defaulting borrower. Case #2: The current beneficiary lienholder was outbid by a third party. This is to their advantage, because they are made whole by virtue of the fact that a third party outbid them. The third party will then obtain a Public Trustee's deed once all other interests have been distiguished, or have otherwise expired.

    Long answer: The mere mention of Plaintiff smells of lawsuit. This, together with an auction do not make sense in the State of Colorado. Here, there is a rule 120 hearing, which basically amounts to a lawsuit between the mortgage bank entity and the defaulting borrower. Basically, it is a hearing to determine validity of the mortgagee's claim on non-payment by the borrower, which if favors the mortgagee, turns out to be a judgment against the borrower, which results in foreclosure officially beginning. This typically occurs after filing of the NOD, which starts the whole process. After NOD plus approximately 125 days, the property is sold at a Public Trustee auction, which occurs in live bidding inside the PT's offices amonst those who are interested. The mortgagee puts up the amount required to purchase the property, which is a dollar figure based on all amounts in arrears plus all expenses incurred by the foreclosing entity. All bidders are required to bid at least $50 over that amount. If no bids are received, the property goes back to the foreclosing entity, with the original Note and Deed of Trust being extinguished. There is an additional time period that lapses after the sale date, which provides time to clear redemption periods of all junior lienholders, then a Public Trustee's Deed is issued to the prevailing party. In any event, the aftermath of all this could and does create a "deficiency balance" which could turn out to be another lawsuit filed against the original borrower. If not, and at bare minimum, there will be an official IRS 1099 filed and sent to the defaulting borrower, which serves to add to their taxable income for the period (year) during which the event occurs.

    Not sure if this helped or created more questions. Were it me, I would contact the local, county public trustee to obtain more info on how these things are done in your state and/or county. Good luck to you!

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    15y

    I don't work in that particular state, so I can only give you my opinions of the terminology you are asking about (based on how I see things within the state where I am).

    The judgment amount is the amount of debt (and probably other fees and costs) that the borrower / defendant owes to the plaintiff / lender. In the event that the bid at the sheriff sale / trustee sale does not reach that judgment amount, then there is a deficiency in the amount the plaintiff will be getting paid. The "Waived" option indicates that the plaintiff is not interested in being paid for that deficiency; the "Demanded" option indicates that the plaintiff will be seeking payment of that deficiency (usually because the borrower / defendant had assets other than the property that is being foreclosed here).

    In a case where the plaintiff / lender is the "winning bidder", the bid amount is probably meaningless, since they will be selling this property as a future REO and the listing agent will suggest to the lender a selling price (which of course the lender will frequently ignore because they are looking to collect the whole amount owed ...) The listing price for the property as REO can be anywhere, from the "winning bid" amount to even exceeding the debt / judgment amount. I don't think whether the deficiency was waived or not will affect the REO listing price either.

    The situation in your case #2 is probably just as you guessed, a second lienholder bidding to take over the collateral that secured their second position loan. They bid higher than the amount of the first lien's debt because they have to outbid all other bidders, and so they bid up until they place a bid that causes all other bidders to drop out. In other words, when a second (or other junior) lienholder is bidding in a case where the first position lender is the foreclosing plaintiff, well the second lienholder is just like any other bidder (although in the typical line of order in which payments are disbursed to lienholders after a foreclosure auction, some of their money paid to procure the "winning bid" will actually be paid back to them based on their lien's position).

    0Reply
  • Leslie Shapiro
    OP
    chicago, IL · Member since 2011 · 2 posts · 0 votes
    15y

    Thank you both! It's going to take me a while to chew over and absorb your responses, but at least I know I'm on the right track. So these things differ greatly from state to state, I guess. Good thing I like research! :-)

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free