do the banks want the bad assets off their books at any cost?

[mopinko]

i am looking at a piece of property that is headed for a sheriff's sale. the amount on the mortgage is a reasonable amount to pay for the property. it is just more than a have in the budget. i am wondering if i should wait for the auction, to see what it goes for, or if i should make a low offer to the owner, and see if the bank will accept the short sale. this is even more nerve wracking than buying our first house.

i doubt anyone will be there to bid on it, really. every third house in the town has a for sale sign. this is a wamu mortgage that got taken over by chase.

so what my exact question is- does chase want to just take what they can get on this, so they can close out wamu's old books? or will they be happy to end up with the title to the house so they can give that a value of their choosing, and make the books look prettier? or am i just over my head and/or thinking to hard?

anyone with any experience buying from sheriff's sales, please clue me in.

[louis-t]

1. OK, I'll try to give you what I know.

Chase may buy back the mtg at sheriff sale. In the past, the sale price would be what was owed on the property. Nowadays, the bank will try to buy the paper back for market value (which is less now). Then they would put the property on the mkt. There are legal fees, tax issues, usually past water bills, etc. You would think that the bank would be anxious to do a short sale. Only in the last year have the banks been coming around a little. BoA is still horrible to deal with. During the short sale, the bank might throw a few curves. They could offer the owner a loan remod, a reinstatement, a forebearance, a deed in lieu, or some other repayment plan to get them up to date. I believe the banks have some interest in keeping foreclosures off the mkt because they can show the entire mtg amount as an asset, but when they sell one, it shows up on the books as a loss. I'm not an accountant, so I don't really know how that part works.

edit: I also had a bank (GMAC) sell a mortgage in the middle of a short sale. They said they couldn't negotiate with us until the new owner took over (6 weeks). Of course, the buyer walked and now the offers coming in are $25,000 less. God, they're so stupid.

[mopinko]

2. thanks for taking the time to answer.

i mostly wonder if it is more attractive to the seller to be saved from the whole auction process. i would be thinking i am not going to get more than that mortgage balance, so why not screw the bank.
i know someone here has some info on chase policy right now.

[louis-t]

3. It is harder to get a short sale done after the auction.

If the person owes more than property is worth, the only way you can buy before the auction is by short sale. The bank has to agree and it takes time. After the auction, there likely will be a redemption period in which the seller can: hit the lottery and pay off the mortgage, get a relative to loan him the money to pay off the mortgage. Redemption periods vary from state to state (MI is 6 months, the longest in the nation).

[SoCalDem]

4. The "investors" will show up with cash bids.. If you have cash, you "may" get it

the whole repo/REO/bank-owned sales thing is quite misleading. Before the average person even gets a chance to buy these houses, for the price listed (or even near it), the scavengers with cash swoop in and buy them up..throw 10-20K in cosmetic fixes, and edge out less savvy buyers..

These should be on a first come-first served basis...for the amount owed the bank..and for the ones way upside down, the banks could auction them who the best they could get..

There was an article in our local paper a while back about this very thing.. one place had THIRTY FIVE cash offers on it, so ordinary folks have little or no chance...

[mopinko]

5. it will be interesting, for sure.

we have been planning this for a long time. we are ready. we would rather put our money into bricks than banks. we don't have that much, but we think we can buy low and sell high when the time comes.
if we don't get this, there are plenty more. it is a tough time for the area right now, a for sale sign on every block. but it will stabilize.