How do i find out how much is owed in a foreclosure?

Question

How can I find out how much is truly owed on a foreclosed property. The foreclosure schedule shows me the final judgement; but is that enough information?

I don't want to purchase a home for what I believe is a good deal, but then find out that what's owed is more than the house is worth.

Dion DePaoli · Answer

The wording here is a little tricky.

What is owed on a property can be made up of one or more liens.  Example, 1st Mortgage and 2nd Mortgage or 1st Mortgage and Mechanic Lien.  The sum of those liens is what is 'owed' by the property owner.

The amount 'owed' in a foreclosure proceeding is specific to the lien that is being foreclosed.  The amount will be equal to all unpaid principal, interest accrual, advances and fees.

You can find amount owed in both judicial and non-judicial proceedings on either the Notice of Default or in Summary Judgement or Order of Reference.  In some states, there is an order of Referee which acts as the objective calculator for the parties.  Also, I believe some counties list this information on line when the sale is scheduled.

Great.

Now, what's the point?

Finding what is owed does have a bearing on things but your post is not dealing with any of that.  Your concern of not paying too much for a property is rooted in what the property is 'WORTH' not what is owed.  There is no notice of value or anything similar in foreclosure, you as a potential bidder/buyer have to determine what the property is worth and bid accordingly.

Also, when you purchase said property at a Foreclosure auction, you are NOT buying the debt.  The debt and all legal interest with that specific lien is extinguished.  Often times most of the subordinate liens are also extinguished as well.  Be mindful to pay attention to things like taxes and HOA liens.

So, if a property has a Foreclosure Balance of $100 but you only think the property is worth $50, then do not bid more than $50.

If the property is worth $100 and what is owed is $50, you can exceed $50 balance of what is owed because the property is worth more.  The property is what you are purchasing.  Any excess proceeds above what is owed from the borrower to the lien holder pays down the lien holder in action, then the other lien holders in succession and then pays the borrower any remaining funds.

Outside of knowing what specific county rules on minimal foreclosure bids are, in order to filter a list of potential properties down to a list of potential working properties, I don't really see too much benefit or need to understand what the total amount owed from the borrower is for the lien that is being foreclosed.  Certainly helps fill out the history of the property but, you should only bid on at the auction based on the property value and the expenses to cure physical defects or title defects.  In other words, knowing the borrower owes $100 on a $50 property doesn't change your bid at auction, it has zero affect on your bid and your plan for the property.

Wayne Brooks · Answer

Seems like this is scheduled for foreclosure auction, as per your post.  If so, that final judgement is the amount owed to the foreclosing lien holder only. Whether that is a 1st, 2nd, HOA, whatever will be determined by research as others have said.  If you're new to this, have a title search run first, if you're considering bidding.  If it's not the 1st mortgage holder foreclosing, you'll inherit the 1st mortgage, and maybe some other liens.

Dylan Gelbard · Answer

Thank you for all the information! It was extremely helpful!

All the best

Wendell De Guzman · Answer

Dylan Gelbard, regardless of what is owed, if it's already foreclosed and therefore owned by the bank, you can make an offer BELOW what the loan balance was.

Doug Smith · Answer

Since we only buy mortgages that are distressed, our process is a bit different, but there are going to be similarities that might help. I am happy to help, but need to understand what you are trying to buy; a mortgage, a property at a foreclosure sale, REO from a bank/lender, etc. If you can clarify a bit, I would be happy to help in any way I can.

Ned Carey · Answer

Dylan Gelbard , if it is already "foreclosed" as you used the term, Nothing is owed on it. The foreclosure wiped out any other interest.

If you are going to the Foreclosure auction be sure you understand the terms of the auction and exaclty what rights you are acquiring.  If the terms say you get title free and clear of all liens and encumbrances you don't have much to be concerned about. However depending on the terms you may need to do a quick title search.

If you are buying an already foreclosed property from the bank then again read the contract to make sure they are not slipping in any tern disadvantageous to you the buyer.  Again the contract should say "fee simple title free and clear of all liens and encumbrances", or something similar.  Good luck - Ned

Patrick Snyder · Answer

You should be able to access the county records (online) and see if there is more than one mortgage filed, like a home equity line of credit.  Every system is different, and some require you to pay a few dollars, but if someone has a lien on a piece of property, you'll likely find it there.  This would also include mechanics liens, Land Contracts, and anything involving the city/township if there are code violations.

How do i find out how much is owed in a foreclosure?

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