New York Foreclosures for Sale – When a Sheriffs Sale is Not a Sheriffs Sale
Published on September 9th, 2009.
When investors are looking for foreclosure property in the phase just preceding the actual foreclosure taking place, this is generally at the Sheriffs Sale or auction. At this point in time the property can go to the highest bidder or not. And one constant warning we always receive is that auctions are regularly cancelled. A case in point is one recent home in the throes of a foreclosure where a date for the Sheriffs Sale had be set but was cancelled at the last minute.
The owner of this home, had notified her tenants to move out because of the foreclosure (many home owners don’t even bother), and the minute she did, vandals and looters hit the house and ransacked it. Now the title is still in her name, the foreclosure hasn’t happened and the property has to be demolished, the owner is broke and she has to bear the cost of the demolition too. Not only that, but the city is saying she has to resume maintenance on the house. So now she is in a world of trouble and cannot even sell the property in a short sale as it is worth nothing.
Apparently this is becoming an increasing trend with banks which are foreclosing on properties. They have so many on their books that they start the legal process and then quietly walk away, declining to take possession. Real estate is diminishing in value at such a rapid rate that bank walk-aways are becoming a regular occurrence.
This provides very little or no relief for property owners who are caught completely unawares after receiving months, upon months of foreclosure notices and have moved on to find a roof over their heads, before being evicted. What then happens is the bank bundles these mortgages and sells them to companies, to recover. The companies are going under and the owner of the property remains the mortgage holder of a worthless piece of property. In this particular case the bank with which she originally took out her mortgage loan, could find no record of it.
Some experts believe that this type of activity could be the next wave in the foreclosure crisis. This is something that both home owners and investors in the foreclosure market have to be aware of and it is a whole new kettle of fish. Mortgages getting lost in red-tape, and on-selling! Apparently this is so severe in areas like Buffalo that the City sued 37 lenders last year, citing that they were the reason why 57 homes that may have been perfectly good for someone to live in, had deteriorated to such an extent that they became abandoned.
This kind of activity from banks was virtually unheard of 2 – 3 years ago, but they are dumping more and more during present circumstances. These are more prevalent in states where judicial foreclosure is required to take place, such as New York. Because they have to proceed through the courts they are more transparent. So it is virtually unknown how many of these bank walk-aways are taking place in states where non-judicial foreclosure are allowed to take place.
Filled under Foreclosures For Sale.