If I buy a foreclosure at courthouse auction, am I in any way responsible for debt on

[Dereck12]

New York State ( Upstate )

I'm looking into purchasing a foreclosure that is being sold by a "trustee" at a courthouse auction. I did some research on the property (via RealtyTrac), and it seems like there were quite a few loans taken on the property. From the records there appear to be 3 mortgages (assuming 2 are refinances) the for around 314k. Also, there appear to be 3 HELOCs on it for varying amounts. The last HELOC is in 2008 for 64k. Can't tell for sure but It appears that the foreclosure was initiated by the 64k loan which seems kinda strange since it was the last loan issued. I know this scenario is not for the faint of heart, but I want to do my due diligence to figure out how to deturmin what the risk would be in purchasing this property

Let's say I do a title search, and the title comes up clear without liens. Now let's say that I go to the auction and bid on the property, and my bid is accepted. Am I in the clear once I pay the cash, or is there still the possibility of getting screwed? From what I understand, everything is subordinate to the primary mortgage or loan, any proceeds go to that, and if there are additional funds left, the money goes toward those loans. Also from what I've read the HELOC loans are actually still on the individual even after foreclosure. So other than the possible condition of the structure, and the potential difficulties with owner occupation, are there any hidden pitfalls? If there are no current liens on the property, is there any way that I would owe additional money after foreclosure? The information I have read so far is very confusing. Some says that I would / could be on the line for the second mortgage, some say I wouldnt. Also I'm not sure if a defaulted loan automatically becomes a lein. I'm also unclear, just becuase there is the record of a number of loans and mortgages, how can I find out how much of them was actually paid off? or is this part of the tittle search?

 

[STEPHAN]

If you are not a pro: Don't do it.

 

[FlyingRon]

RealtyTrac is fine for searching for properties but I'd NEVER rely on it for finding out how the property is encumbered. I don't know what you did for a "title search" but I hope it's more than that. A title search, by the way, is 100% worthless unless you buy the title insurance to back it up. The title search should tell you just what is pending on the property (mortgages, deeds of trusts, and other encumberances), but won't typically tell you what is owed.

It would depend on which position is forcing the sale. If the first mortgage is foreclosing, it will wipe out the junior loans. However, you better be sure the taxes are paid up, those arrearages are your responsibility.

You do understand you will have to close on this property near immediately for cash? You do understand that the first mortgage holder will almost certainly bid "what they have in it?" As STEPHAN points out, this is not for the inexperienced.

 

[STEPHAN]

Even if you buy a "First", there are many things that do not get wiped out.

I have a lot of experience and I am still VERY carefull. I have seen lots of newbies loosing their money.

 

[Dereck12]

RealtyTrac is fine for searching for properties but I'd NEVER rely on it for finding out how the property is encumbered. I don't know what you did for a "title search" but I hope it's more than that. A title search, by the way, is 100% worthless unless you buy the title insurance to back it up. The title search should tell you just what is pending on the property (mortgages, deeds of trusts, and other encumberances), but won't typically tell you what is owed.

It would depend on which position is forcing the sale. If the first mortgage is foreclosing, it will wipe out the junior loans. However, you better be sure the taxes are paid up, those arrearages are your responsibility.

You do understand you will have to close on this property near immediately for cash? You do understand that the first mortgage holder will almost certainly bid "what they have in it?" As STEPHAN points out, this is not for the inexperienced.

I do understand that I have to buy the property in cash, and I do understand that I would want / need title insurace if I wan to go through with the purchase. I don't understand what steps I can take before hand to vet the property. I've taken a look at many properties in this area and it seems like with most of them absolutlely nobody bids on them. I also understand that lender who is owed the most will bid on the property, up to what they are owed ( or something in that realm ). Is there any way to deturmine what this number is? Obviosly I am new to this, but I have a few things in my favor. I'm capable / willing to do any work need to fix the property. I have a good quantity of cash on hand, I'm willing to pay some amount of money just to see if the property is viable

 

[kccutie1983]

yes

I purchased a house at the court house auction and yes the lien fell over on me, however they generally will wipe out the debt, you have to apply. they gave me the application. the home I purchased had a federal lien. not sure if that's the same circumstance but that was my experience.

 

[FlyingRon]

I purchased a house at the court house auction and yes the lien fell over on me, however they generally will wipe out the debt, you have to apply. they gave me the application. the home I purchased had a federal lien. not sure if that's the same circumstance but that was my experience.

That will work for federal tax liens. It usually will not work for municipal tax arrearages. After a few weeks the poster who originally asked is probably long gone. They don't usually have that great attention spans.