Tricky California HOA foreclosure

[Gregory Stone]

I'm asking as an HOA president. Our HOA foreclosed on the property, the house went up for auction with a starting bid of about $45k, nobody bid (presumably due to the the unknown 1st mortgage amount), then the property reverted to the HOA. The HOA now owns the property under a trustees deed.

Prior to the court steps sale/default of the property to the HOA, the HOA had long since filed a Notice of assessment (2009) and twice the lender filed a notice of default. The first was rescinded with a filing. The second was not, but the lender never foreclosed and pushed for a sale. I gather the lender is "parking the NOD" as they say. The last action by the lender was to file for a substitution of trustee for what appears to be a collection foreclosure servicing company called Western Progressive, LLC.

All attempts to contact the lender to get a payoff previously have been to no avail. This last filing 2 weeks ago gave me the above company and I am preparing a fax on behalf of the HOA to request the payoff amount. We think it is between $425k and $475k; everything north of $399k is default amounts since 2012.

My question is what would the wisest thing be to do here? Should we list the property and try to sell it, disclosing the 1st mortgage encumbrance and work out a condition in the sale to satisfy all the HOA back assessments and let the buyer handle the 1st? Or should we try to cut a deal with the lender so we can get more money than we are owed and also be able to pay off the lender; not to mention sell the property under market a bit so the buyer has too to either improve or flip? The last comp for a similar unit in our complex wen for $680k.