A Close Amigo Of Mine Called To Discuss A Friend’s Problem
She was getting cheated on a Trustee Sale of a home worth more than $1M.
The home had a $400K+ loan and a second that was foreclosing for, let’s say, $130K. The lady was getting bad legal advice, no action, and it went to sale.
The final bid was around $430K. The former owner received a notice to move out but no info from the trustee.
When The Bid At An Auction On Any Lien Goes Over The Opening Bid
AND there is no junior lien, the extra money goes to the home owner. It does not go to the foreclosing party or any senior loan holder, to pay over-due taxes, etc.
Now, my friends have recommended an outstanding attorney to her and it appears she will get the excess. It is always so sad that people do not move early on Trustee Sales. (In this case she could have listed the property during the notice period and tried other foreclosure delaying procedures).
And she kept the first current. That money could have been saved. In most cases you keep junior liens current, not the firsts. If there is lots of equity in a property, junior lien holders will move fast. They are not called hard money lenders because of their workout habits.
And Another And
Any residential real estate agent in that area should have seen the Notice of Default. That allows 4 months plus to list and sell so make the contact. Where were all the SFR designees in Orange County? They received this designation from CAR and are supposed to be experts in Short Sales, Foreclosures and Real Estate Owned sales.
Final Thought, Agents
Study Crowd Funding. Raise enough money to pay off the second. Give the nice lady a one-year note. Rehab and sell the property and pay off the nice lady.
I need to know about Crowd Funding.
I have a scenario for you and want to talk in
Please text me at 650 898 4965
and let me know when we can set up a time to talk
or we can text if you prefer.
Thank you for your comments. However, I do not have any background in this area at all. I have a friend who is a legend in this field.
His name is Gene Trowbridge, 949-855-9399. Email: [email protected]; I recommend him highly. BTW, and he and his partner are giving a workshop in San Diego on December 6th and 7th. You should check it out.
You can tell him that you got his name from me. They have a program of a certain amount of time free. He will have answers to your questions.
Thanks again and keep reading.
As a foreclosure trustee (as well as an instructor and friend), I’m a little surprised at your claim that the property owner was “getting cheated” due to a foreclosure on a high value home. The fact is she was not paying one of her loans resulting in the foreclosure process being started. A foreclosure is not something that a lender takes lightly and rushes to when a payment is not made. As you are aware, I represent many hard money lenders. Not one of them would ever foreclose without having exhausted every opportunity to allow the borrower to cure the default. I would bet the borrower never answered any of the lender’s phone calls, letters, emails, etc. prior to the commencement of the foreclosure as she also failed to respond to the notice of default and notice of sale (which are required to be sent to her via first class and certified mail).
Keeping the first current while defaulting on a junior lien happens quite often. I have seen many occurrences where borrowers erroneously assume that since there is a senior lien, nothing could be done to the borrower or the property. This is a bad assumption on their part as evidenced by the borrower in your anecdote.
However, contrary to your assertion, putting the house on the market is not a “foreclosure delaying procedure.” (In fact, I do not know what a “foreclosure delaying procedure” is). It’s all about timing and communication with the lender. A borrower who puts the property up for sale a week before a foreclosure auction is scheduled is not likely to be able to delay any proceedings. A borrower who communicates with their lender early and who is reasonable about the potential outcome is more likely to persuade the lender to work with them. Oftentimes, borrowers offer no reasonable solution.
Keep in mind that the borrower obtained a hard money loan because she could not qualify for a conventional loan. These lenders offer an alternative to people who would otherwise be stuck. Are the rates and costs higher? Absolutely. But then again, so is the risk to the lender. Don’t blame the lender for having a borrower who reneged on their promises.
Finally, the borrower should not have needed an attorney to claim the surplus proceeds (the excess over what was owed to the foreclosing lender). The trustee will send out notices about the availability of proceeds a few weeks after the foreclosure sale. The borrower likely just spent money she did not need to.
Randy, you misread my comments. The problem was the attorney she hired before the foreclosure did nothing. AND the problem was that the Trustee never notified her that there was an excess of money. Three months later when someone contacted said Trustee, the money was disbursed. Her friends told her that the excess over bid goes to the foreclosing party.
This was like so many Loan Mod cases, where nothing was done. And the Trustee never sent out NOTHING to any proper address. There was no due diligence on their part.
Her big problem was the the foreclosing party did not use Randy Newman. And yes, she should have sold long before a foreclosure. And she never put the property up for sale, BUT even being in escrow does not stop any clock running.
My comment about paying the first agrees with you. I know my experience as a court appointed receiver was years ago but times have not changed that much. It is my belief that a hard money lender will foreclosure faster than an institution so keep the second current. Either one can foreclose at any time. Keeping second current does not eliminate them from foreclosing because they can pay one of the late payments and start a foreclosure.
And I think that we can agree that the widow lady was not very intelligent in this situation, as there was a lot of value in the property as indicated by the overbid. Just another story in so many foreclosure stories.
Thank you so much for your comments and for taking the time to write. It is always good to hear applause for the staff. It would be so appreciated if you could put the same comments on Yelp. Also, do you remember the names of anyone to whom you spoke? Would like to give a shout out to individuals. Need to have lunch again soon.
As a trustee sale buyer of commercial real estate the order of the overbid on a 2nd deed of trust is all junior deeds of trust and junior liens,if money is still left over it then goes to the old owner.The foreclosure trustee determines this by the tsg thanks jeff
Thank you Jeff, that is what I was stressing. The money came in but the trustee did not contact the homeowner as there were no junior liens. These comments are covered in my Foreclosure Book. I am updating it now and will send out info when it is done.
Good info. No way of knowing if an SFR agent did contact her and she,
a. resisted a short sale, b. never responded, c. assumed since the first was current she was OK.
Question. Has the time from NOD to sale changed from 3 mos, 3 weeks and 5 days to 4 months plus?
Also, Duane, “the Trustee never sent out NOTHING….” is a double negative. Should be . ..never sent out ANYTHING. I am surprised at you.