All Forum Posts by: Dan Thompson

The Safe Harbor provisions were a part of what seemed off here, but the "lender" in this case didn't appear to be primarily in the origination/servicing business, so I was still holding out some hope that this was a good opportunity partially disguised.  

From research it appears the "lender" is a small collection of a few young real estate agents from the Miami/Fort Lauderdale area trying to buy up non-performing notes and foreclosing to acquire the properties outright.  Seems a bit risky, and in this case they got in over their heads and bought a bad debt.  I'm not surprised they've apparently given up on this house and are taking a loss.  They probably made the same mistake I did trying to match up the mortgage docs with the satisfaction/discharge docs while sifting through all the same names and missing that 1st mortgage still existed, only they never got a title report to back up their findings.

The title report has cleared up the confusion regarding this property.  Unfortunately, it's not worth pursuing at auction.

The homeowner had taken out many different loans on this home, and I had reviewed a lot of satisfaction/discharge documents while trying to follow the chain.  I thought all other loans were satisfied but the one that lead to the foreclosure.  At one point, the owner took out a new 1st mortgage and home equity loan on the same date.  One of the satisfaction/discharge documents I reviewed specified that date, but it turns out it referred only to the smaller home equity loan.  The 1st mortgage remained outstanding.  The homeowner had such a common generic name I had trouble separating out all the docs relating to him in a general county records search.  Title report laid it all out nicely in order.

The mortgage acquired by the lender and foreclosed on was a 2nd mortgage recorded at a later date.  I see now why that winning bidder backed out on paying for this house.  He probably didn't learn of the 1st mortgage lien until after.  Glad I did my due diligence, and thanks to all for your perspectives on the situation.  It didn't quite look right, and now I see why.  Too good to be true was just that.  

I also would have anticipated the lender would pay the HOA lien prior to county auction, but one auction already happened last November with no action from the lender. The winning bidder ultimately did not complete payment so a new auction was rescheduled. Lender has made no apparent attempt to redeem the property or remedy the situation for over a calendar year. No court filings I can see since late 2017.

I ordered a title search a few days ago and actually just got the results this morning.  I'm looking through everything and will update this situation with any clarifying information as soon as I can.  Thanks for the info, everybody!

I'm trying to find a way to get some insight on this situation surrounding an upcoming auction property I'm very interested in.  I want to know the status of the 1st mortgage lien in the following scenario in Florida:

Homeowner has a loan from PNC bank. A small Florida LLC acquires the note and forecloses because the homeowner isn't making payments. Foreclosure judgment is in favor of the LLC (from here on just "the lender" for simplicity) and the property is ordered to be sold at public auction. Nobody bids so the lender acquires title to the property. Does the completion of the foreclosure and acquisition of title by the lender extinguish the lien permanently? I ask because the following happened:

The homeowner also owed a significant amount of past-due HOA assessments. The HOA separately foreclosed on the homeowner and the foreclosure went in favor of the HOA. The property was ordered to be sold at public auction again. This was before the certificate of title was ever issued to the lender after the first auction. Nobody bids in the second auction, so the HOA wins the home, and they too are issued a certificate of title.

Two foreclosures. Two certificates of title issued to different entities as a result. The certificate was issued to the lender first and HOA second.

Lender and HOA argue back and forth for a few months over ownership of the property and eventually sign an agreement whereby the lender would pay $15,000 to the HOA for past-due assessments and the HOA would release its title claim via quitclaim deed or some other instrument. The only problem is the lender never made a payment to the HOA, per court filings. HOA forecloses on the lender as the owner of the house. The upcoming auction is the one I'm interested in.

I want to be sure I understand the process here.  If the 1st mortgage lien is extinguished when the lender acquired title, can the lien reattach to the property if the lender loses title via foreclosure?

Basically, could I still be on the hook to satisfy the original 1st mortgage lien in this scenario?

Thanks BP!  Looking forward to hearing what people think or if anybody has seen this situation before.

Bigger Pockets Community,

I'm interested in a property near a current listing of mine. It's due to be auctioned by the county on February 5th as part of foreclosure proceedings. While researching the court documents and title/deed history, I discovered that both the HOA and the lender separately foreclosed on the original owner and EACH were issued Certificates of Title after adjudication and public auction were done.

It appears the HOA and lender fought back and forth for a while but then signed an agreement whereby the lender would pay the HOA a designated amount for past-due assessments and in turn the HOA would release its title claim via quitclaim deed or whatever instrument the lender wanted. The HOA seemed to want their owed assessments and then they'd get out of the way. Apparently, the lender proceeded to never pay the HOA anything and now the HOA has foreclosed on the lender as the new owner of the property for all the past-due HOA fees and penalties/interest.

In this case, the "lender" is a small LLC that apparently bought the owner's original mortgage.

The outcome of this foreclosure action was the scheduled public auction of the property after the foreclosure was granted to the HOA against the lender. I'm very interested because it's an HOA lien of about $50k for a property that would be worth about $325k after moderate rehabbing, so there's a wide gap there to include purchase cost, rehab costs, satisfying any other liens that may be attached to the property, etc. when comparing to the home's possible value at resale.

The fact that two separate Certificates of Title were issued by the same county court after separate foreclosure proceedings just adds another layer of uncertainty though.  A number of questions arise.

The lender's mortgage lien on the property would cease to exist once they technically took title to the property themselves, correct?  If a third party such as myself buys this home at auction, there won't be any mortgage lien attached?  Would the lender have any other claim besides to any excess proceeds of the auction?

If there already exists a Certificate of Title naming the HOA as owner as well, what complications could follow if I or other third party win this house at auction? I assume some negotiation (and likely buy-out payment) would be necessary to get the HOA to issue a quitclaim deed or something to vacate their title claim, similar to the agreement signed between lender and HOA previously.

Are there other issues that could exist that would make you avoid this property completely, in spite of the potential profit?  Thanks.