Archive for the ‘Foreclosure Auction’ Category

To turn a foreclosure auction into gain one requires patience and nerves of steel. Recently a seminar was held at Hotel Huntington Beach on foreclosures. The speaker, Hannigan, was a lawyer from San Diego who claimed to have traded in 50 foreclosed properties in 25 years. It is these investments that have made him wealthy. But Hannigan stressed that anybody listening to him would be mistaken to think that the route to wealth via gambling in distressed sales is as easy as it sounds. The prerequisites to end up with a success story are determination and grit. An orator of sorts Hannigan kept his audience engrossed. He stressed that dabbling in foreclosure auction is not child’s play but is a full time serious job.

The investor must first plan what to do with property after having made a thorough search about liens and deeds. A cashier’s check must be ready in case the bidder turns out to be the winner. Then one must be prepared for a shock because properties are often yanked off the shelves at the eleventh hour for many reasons – the main one being an agreement between the lender and borrower. This is all part of the foreclosure game.

Having crossed this zone if finally the buyer does land up with the property then other problems might pop up – the occupants might have to be evicted and extensive repairs might derail the budget.
Hannigan attracted both seasoned investors as well as novices beginning to toy with the idea. Jerry Tagliaferri is new in the field having just recently got a real estate license. The falling real estate market edged him on to try his luck at foreclosed auctions. He has been regularly attending auctions but comments that most of the foreclosed houses hardly get any bidders. It then becomes REO or property of the lender. The few units that do have some equity left over and above the loaned amount are fiercely fought over. Tagliaferri was lucky to win a four-hour free discussion with Hannigan. The latter usually charges $250 by the hour while training.

Another listener was Jim Pollina who drove down from San Luis Obispo County to listen to Hannigan for the third time. He was amazed to note that many people slipped into foreclosure even when there was equity on the house. The point is to spot these goldmines.

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The club is scheduled to be handed over to the highest bidder at an auction to be held on 26th December in Pitt County Courthouse. It will start at 2 pm as per an insertion in the classified section of a daily newspaper – The Daily Reflector.
The Brook Valley Country Club boasts of an eighteen-hole golf course and has presided over Michael Jordan Celebrity Golf Classic as well as NGA Hooters Tour Touchstone Energy Open. The current owner is Brook Valley Country Club of Greenville Inc. Bob Edwards is the president of the club board. He did not comment on the pending matter.

The highest bidder will take over about 152 acres short of the actual clubhouse, situated on Oxford Road. The house is specifically exempted from the foreclosure notice. Apart from the sprawling golf course the property also includes a swimming enclosure, tennis courts – all amounting to a heated area of about 22,000 square feet.

The total value of the property is over $3.9 million as per records with the break up being $1.44 million being land value and $1.4 million being value of building. $1 million is calculated to be value of extra features. In 1986 it was sold for $1.75 million.
The Brook Valley Country Club with its golf course made its debut in 1966. The East Carolina Bank is handling the foreclosure. It remained non-committal and excused them by saying that they are legal hurdles about discussing without seeking the permission of their clients.

The foreclosure auction notice said that a cash deposit not more than 5% of the amount of the bid or $750, whichever is greater would be required at the time of the sale. If an upset bid is filed within 10 days then the offer will be made to one who bids the highest.

With such a giant like Brook Valley Country Club facing the anvil at an auction the question that rises to the forefront is the reason for this turmoil on the socio-economic front in general right across the country. Experts and analysts are huddling together with explanations but no magic solution has been found as yet. The prime blame is being made on the sub-prime market, which made easy money within everyone’s reach. When interests rose, so did delinquencies, foreclosures and auctions. The government is trying remedial measures. One has to wait and watch.

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On the first Tuesday of every month it is a bonanza for investors who throng the Coweta County court. For weeks they had been preparing for this day when foreclosed properties were going for a song. The bidders are a patient lot

There are so many investors in the fray that classes and courses are being held to show them the ins and outs of foreclosure auctions. Bobby Gaines is the Director of one such unit teaching novices about tricks of the foreclosure game. The classes have become extremely popular with packed lecture halls. Future dates are all booked up.

Foreclosure sales are also termed distressed sales. By this legal step the mortgagor loses all his rights to redeem the property. The rules of foreclosure differ from state to state. In Georgia the lists are published in newspapers four consecutive weeks prior to the sale with relevant details like location, date, debt amount, names, deed book, page of security deed etc. Here it is a non-judicial process and is speedy since it does not require the signature of either judges or other officials.

Gaines explains about three types of opportunities investors have. These are pre and post foreclosure sales and REO or Real Estate Owned sales. It is best to opt for the pre-foreclosure sales because of less competition and more properties available for comparison. There is the possibility of closing directly with the attorney and less initial cash payment. The sellers are keen to sell off and avoid the stigma of foreclosure. On the negative side, junior liens are not wiped out. Real estate agents are the best advisors on pre-foreclosure sales.

A foreclosure sale in the courthouse wipes out junior liens. The opening bid is inclusive of total debt, late fees, penalties and legal fees. Certified cheques have to be kept ready.

REO’s are not courthouse sales. Banks and lending houses avoid it because the federal authorities frown on it. They are not many to pick and choose from and are listed by insurance agents. A regular attorney can complete it and the units are bought on the basis of as-where-is.

The investor should consider the problem of repairs and hire professionals for appraisals. The Internet is unreliable for title searches. Other real estate, legal and insurance, tax etc professionals should be taken into confidence to make the best bargains with equity.

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Foreclosures have come – they are knocking at every alternate door. The foreclosure process consists of several steps. When the borrower fails for the third consecutive time to make payments the lender sends a foreclosure notice. Time is again given to allow for payment but in the event of a failure an auction date is set.
Auction may be of two types – one is organized by the Sheriff and the other by the lenders.

For a new comer trying to carve a niche in the real estate business the Sheriff’s auction can be challenging. The amount has to be paid in cash or certified cheque right there and then. In the other kind of auction there is the option of going for mortgage financing.

Ralph Roberts has founded a brokerage firm in Detroit area and co-authored a book dealing with foreclosure investments – ‘Foreclosure Investing for Dummies’. He suggests that the buyer should first do a lot of research on the property well ahead of the auction date. This should include a visit to the city hall to hunt public records in the building department to find out first hand if there have been any violations of building rules.

A check out on the property if possible will answer queries about vacancy and if it is in an acute run down condition. There is the clause of ‘reserve’ to be seen to. It is the minimum price the seller is willing to agree. But until the bid is done nobody will know about it. In an ‘absolute’ auction the highest price is sure to win. It will not be unwise to spend about $350 or so to engage a valuer to appraise the property. Having gone through these steps the potential buyer should now think clearly about what is the maximum price he or she is willing to offer. Having reached the number it is necessary to stick to it without vacillating.

Roberts also advises the buyer to opt for a buyer-broker agreement with a property agent who will give advice about the auction operation in return for a commission. The latter is about 3% of the purchase value.

Despite this groundwork the presence of someone known and trustworthy will help during the actual time of the auction so that the buyer does not lose his cool and bids for more than what was initially planned.

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The country is in the grip of foreclosure crisis – the worst in 16 years. The Federal Reserve and other allied banking regulators have taken the unprecedented step of appealing to the mortgage lenders not to rush on with proceedings. The man in the street has been surprised by the move – the likes of which they have never heard of hitherto. The authorities can only make appeals as the securitization transactions are contractual and anything contradictory to it cannot be enforced. It is not a good sign as it exposes the hard fact that except for appealing nothing can be done to rein in financial bodies playing havoc with loans. The government is giving priority to helping citizens keep their home fires burning in their own houses. Those who have provide services of securitized mortgages are asked to reach out compassionately to distressed house owners.

The strident appeal has come straight from President Bush and also from Federal Reserve chairperson, Ben Bernanke. They assured of standing beside those who had been trapped into teaser loans. Bush spoke of a plan to permit government housing administration to try to help besieged borrowers keep home fires burning. It is not just a mere coincidence that the joint statement is made a day ahead of a hearing of sub-prime collapse before US House Financial Services Committee.

Foreclosure figures are alarming. These point to worse days ahead. Nearly 1.3 million sub-prime mortgages is about to reset to higher rates this year. In the following year another 1.2 million will follow suit. It is the combination of high interest rate and low property value that has caught house owners unawares. Late payments and or debts rose to more than 14% during the first quarter of 2007 – making it the highest in four years. In July this year the number of foreclosures across the country doubled from what it was last July.

Sub-prime mortgage agents themselves are in trouble and many have been forced to down shutters as credit supply from investors has begun to dry up. Many jumbo lenders are desperately trying to contact borrowers for their own interests. For the lender foreclosure procedures are time and money consuming. Idle property is dead weight. They want money to trickle in. Generous options about refinancing and modifying rates are being made with Wall Street averse to real estate business.

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The crisis in the sub-prime market is being held responsible for world wide heart palpitations. Figures and statistics are rolling in and experts are struggling to analyze and pin point the issue. Generally the accusing finger points to lax mortgage practices. On the other hand if ordinary folks were not able to avail of easy loans how would the great American dream of becoming a house owner be realized? Unfortunately both the borrowers and the lenders overstretched themselves creating a situation in which a snow balling effect is being felt in all spheres of life. There has been a socio-economic fall out.

The detailed picture is not the same everywhere. According to experts a tendency to be noticed is that 90% of the owners with loans of $250,000 or less are worst affected. As yet the giant loans are sitting pretty. This is the picture in North Texas. Foreclosure listing sleuths are tracking details of more than a dozen Texan Counties came to this conclusion. This has been the tendency during the last three or four years. It is not that the low priced houses are more in number. During the first nine months of this year nearly 31,000 units valued around $4.5 billion are up for sale by the lenders. It reads a 12% rise in numbers and 19% in value during the same time period in the previous year – 2006. This year the loans that are being foreclosed started its loan history in 2003.

In Dallas Forth Worth the house loans were in the kitty of the nation’s giant mortgage firms – Fannie Mae and Freddie Mac. Less than 2,000 of the foreclosed units (6% of the total) came from house owners defaulting on the equity loans of their properties. Specialists opine that the effect on real estate is not that bad as anticipated. These still represent a fraction of the market.

Of the foreclosure units only about 1% during the first nine months of 2007 were for properties worth more than $500,000. But soon the picture might change for the worse with lenders asking for more interest. It might very well cause the number of the big loans sliding into foreclosures to rise. There is much talk and speculation about these jumbo loans. Builders are putting their heads together and trying to find out which way the wind is blowing.

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The foreclosure crisis marches on and following its trail are hungry predators who are making a living out of people’s woes. Better Business Bureau of Central and Northern Arizona have sent out a loud warning.

It is apprehended that nearly 1.7 million houses will soon be tainted with foreclosure. The affected will be desperate trying to save their home and hearth. In the melee they will catch on to anything – even a straw. Here lies the danger. The wolf will knock wearing grandmother’s clothes. Beware!

The bureaus are flooded with complaints from foreclosure victims who reached out to questionable foreclosure rescue companies. The whole thing is another scam. In the last three years there have been 111 complaints.

The usual mode of approach is that these crooks first make contact over phone or mail. Sometimes they make themselves available on the web where they make tall claims about refinancing loans and stopping foreclosure procedures. The bait is that they promise to return fees if the services are not properly delivered. Desperate sufferers had paid as much as $1,300 only to come up against a blank wall – no redress and no refund.

Better Business Bureau gives the following tips to foreclosure victims. They should immediately contact BBB over phone or through Internet and ask for a Reliability Report, which is free. Without this report no payment should be made to anyone plying a lifeboat.

The other option is to check the rescuers credentials with the office of the Attorney General. In general one should be cautious about the personal approach like a handwritten note popping out of the mailbox or under the front door. The language will be gushing and flowery about help being at your doorstep. The tone is that only your interest is on their minds!

The best thing is to directly approach the lender. Negotiate with the mortgage company.

A legal document should never be signed under duress. Especially be cautious about trusting smart talkers and signing away your property rights. Before putting your name on the dotted line consult a family member/friend, lawyer or financial expert. Give them time to scrutinize the paper.

If the feeling persists that the ‘rescue’ team has duped the victim, do not hesitate or delay but immediately contact BBB or any recognized government body. The authorities are alert about these roving wolves baring fangs underneath granny’s bonnet.

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BIOTA a water bottling company based in Telluride has been ordered to proceed with foreclosure sale as per orders of USA Bankruptcy Court. An attempt to delay it has met with failure.

As per releases of the aforesaid Court in Colorado district, BIOTA (Blame it On the Altitude) owes more than 100 creditors the total amount of $10.5 million. It largest creditor is United Parcel Service’s lending depart UPS Capital Business Credit.

BIOTA is disputing its claims of $7.5 million. BIOTA says that it will first go through the foreclosure and then stake counter claims against UPS by asking of $10 million as damages for unethical lending, says Jeffrey Hart the attorney of BIOTA based in Plymouth, Michigan. Hart opines that things are just warming up for the big battle ahead.

UPS Capital was not available for comments regarding the imminent war drums except for a vague statement that BIOTA’s attitude was most unfortunate.

A part of the disputed $7.5 million is about a loan of the Department of Agriculture, USA, which UPS Capital was responsible for collecting. Unfortunately BIOTA failed to repay. These loans are federally guaranteed. It is the taxpayer who is the actual lender. It went into default two years ago. But since then all avenues have been probed without any favourable result.

BIOTA came into name and fame using biodegradable bottles. They have now negotiated with a group willing to buy its assets and save it from the debt trap. The group will either buy during the foreclosure sale or at a later date during the redemption period of 75 days. Hart was unwilling to disclose the name of the investors or say how many there are in the group. BIOTA owner David Zutler could not be contacted while another company executive refused to comment on what Hart had said.

Things have been rather down for BIOTA for quite some time. Last year their financial troubles became worse when independent laboratory tests detected mould, bacteria and e-coli traces in the plant’s water. Luckily the findings had been timely discovered and none made its way to the unwary consumers. But for BIOTA it spelt doom. The plant had to be shut down last year in September. It limped back to operations in December. However legal action by UPS Capital had initiated legal proceedings against BIOTA much earlier in May last year.

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