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[emmajacob36]

One of my friend is going to bid on a house at foreclosure and it has a 1st mortgage of $290K and a second of $71K. The lender on the first two mortgages is Decision One Mortgage. The lender at foreclosure is Countrywide. Does this mean that if he buys this house at foreclosure that he will own extra money to the second mortgage or just the first mortgage and back taxes?

[Petunia 100]

One of my friend is going to bid on a house at foreclosure and it has a 1st mortgage of $290K and a second of $71K. The lender on the first two mortgages is Decision One Mortgage. The lender at foreclosure is Countrywide. Does this mean that if he buys this house at foreclosure that he will own extra money to the second mortgage or just the first mortgage and back taxes?

Your friend will not owe any money at all other than what he borrows to purchase the house. He will take a new mortgage, not assume the old one(s). Existing encumbrances will be cleared up through the title process.

Back taxes will have to be paid, but not necessarily by your friend. Usually this is something the buyer and seller negotiate.

I thought Countrywide no longer existed?

[jpg7n16]

^^Agreed.


If your friend buys the home for $350k with a $70k downpayment, his mortgage will be for $280k. The previous owner's mortgage doesn't matter.

A lot of people think that the mortgage is part of the house, and that's just not true.

The house = 4 walls and a roof = physical asset
The mortgage = the money someone had to borrow to pay for that house = liability

You don't take over other people's loans when you buy something of theirs. You buy the asset (physical house) and whatever money you give them, they pay towards their debts.


So your friend will not take on either of the previous owner's mortgages any more than he'll take over the previous owners credit cards.

[snafu]

Your friend may or may not be the successful bidder, but he needs to learn about the process before he commits huge sums. He is free to bid any sum he wishes depending on what he believes the house is worth in it's current condition. Foreclosure are sold 'as is,' there are no guarantees/warranties, the house may not meet code. The sums owed [$ 290. K, $ 71. K] do not necessarily reflect the current value of the house and property. It has been reported that Countrywide's business practices failed to follow industry standards.

Should friend's bid be accepted, the financial institution may ask for further negotiation. Some 'closing costs' seem like scams. After that there is potential for a long list of hoops to jump depending on the barriers erected by the current seller Good luck

[mcfroggin]

Some good advice above. Foreclosures can be great deals or huge busts. Buyer beware.

[LMA]

One of my friend is going to bid on a house at foreclosure and it has a 1st mortgage of $290K and a second of $71K. The lender on the first two mortgages is Decision One Mortgage. The lender at foreclosure is Countrywide. Does this mean that if he buys this house at foreclosure that he will own extra money to the second mortgage or just the first mortgage and back taxes?

This does not make much sense. What do you mean the lender at foreclosure is Countrywide?

I don't know where you are at but in my state, and I believe this is very similar most everywhere else, you cannot buy at the foreclosure auction that takes place at the county courthouse with a mortgage. It has to be an all cash purchase.

If you buy at the courthouse steps the second mortgage is wiped out therefore the bank that has the first mortgage is the one with precedence and if no one buys it a the steps then the bank with the first mortgage takes the house back. Once a bank has taken a house back it becomes a REO and you can offer whatever you want on it. It's up to the bank whether to accept your offer or not.

[Nightfly]

If this is a first time bid process for your friend, he should tread lightly. As a previous poster noted, foreclosure purchases should be conducted by those who have a lot of experience in the real estate world - not by folks simply looking to buy a house. If he's truly interested in getting a place for cheap, he should contact a realtor who specializes in "short sales".