Lis Pendens

If you get the Title Company involved early in the process and let them know what the issue is (and you get a good Title guy) you should be able to complete the transaction. The Lis Pendens is just putting everyone on notice that a foreclosure action has been started on the property. As long as the sale will result in a payoff of the mortgage lender, there's no reason for the sale to be blocked. but again, make sure every (your lender,etc.) knows about it so they aren't surprised when they "discover" it.

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David Goldsmith
DG Neary Realty

30yrs, have you ever bought at the actual foreclosure auction? Do you ever see the opening bid start below the amount on the judgement?

LOL...... it's so hard to "talk' to a mixed audience.......

Yes and yes (times 4 figures).

What do you mean by "times 4 figures"? As in thousands of times?

30yrs, thanks!

inonada: Yes.

Thanks, 30yrs. Is the point that the bank is willing to let it go at a lower price, or do they have some incentive to have the auction close to themselves at a lower price than the judgement so they setan artificially low bid (i.e., they'll bid up to something reasonable if there's a real bidder)?

There are many reasons. First one is sort of "fake": you asked "Do you ever see the opening bid start below the amount on the judgment? " and most start at $100 and if no one bids they just take it back. For most, it's for the wrong reason: many bank attorneys mistakenly believe that if they take back a unit for $100 that the amount of the transfer tax on the sale will be lower. However, we have always paid transfer taxes based on the full amount of the lien even if the sale price was below that, based on advice of our council and Title guys. But even the one's who don't do it for that reason often start the bidding at $100 for whatever reason.

Things vary from bank to bank, sale to sale, law firm to law firm. But if you think about the concept of a "short sale", why wouldn't a bank be willing to let a property go at a foreclosure auction at the price they would have been willing to do the short sale at? or even more. Think about how much the bank will potentially have to spend to take it back and sell it? A brokers fee, carrying costs, administrative costs, a good chance an eviction will be necessary. But some banks just always bid their lien and take back properties, others have more or less active program for selling their foreclosures at the auctions: for example, there is a whole industry of companies which have networks of brokers throughout the country who do price opinions pre-foreclosure and use those to set their upset prices (I've probably done over 10,000 of those).

It also depends where we are in the business cycle. When there are relatively few foreclosures going on (boom times) banks may just bid up to the lien and take back all properties, but in bust times, there can be so many foreclosures that a bank's REO portfolio can make them look insolvent. So they start doing anything they can to move properties, one of which is at the foreclosure auctions. Now, most bank's attorneys don't like the people who buy at auctions, because it means they have to do more work on what is often a "fixed fee' arrangement (some of the mills used to charge as little as $750 to do a Coop foreclosure), so most of the time when you call and ask about the foreclosure, they won't provide ANY information and expect you to do your own "due diligence". Often, this is counter to their client's (the lender) interest since it tends to quell bidding at the auctions. They usually try to play it of as "I can't legally tell you that information", which 99% of the time is pure BS. For example, we once had a firm which didn't publish the name of the debtor on a Coop sale, and told us they couldn't release the name to us, but we should do our own due diligence. Well, how the f*ck can you do any due diligence on a UCC sale without the debtor's name? Others (MANY/most) tell you they can't reveal the upset price (the minimum price at which will sell). Again, BS. When Citibank was in the height of their attempts to sell as many units on the steps as possible, the took out column ads in the NY Times where they listed in bold print what the upset price was. And it worked: more people showed up at the auctions, more people bid, and you've got to believe that this led to higher sales numbers. but now since they aren't pushing so hard in NY, they have some LUDICROUS terms in their "Terms of Sale", etc.

hope some of this answers your questions.

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David Goldsmith
DG Neary Realty

30yrs, you kick ass for such a detailed answer. So what do you do for "due diligence" on the opening bid or the upset price? Just show up at the auction and figure it out there? Seems like a crappy way to minimize losses for the lender.

That's why it's such a PITA: it used to be that if you were a "regular", you'd have a whole bunch of certified checks made payable to yourself and when you went to the auctions you knew which one's were going to be "interesting" (i.e. upset price low enough). now, the law firms want checks made directly to themselves so you have to get new checks like every day (HUGE PITA), you have to show up at every auction because you never know what the upset prices are going to be, half the time they tell you the auction is still on even when it's been canceled so you do all of that for nothing.