I like to buy a house from an bank repo house. The first loan bank will auction the house, but the house still has 2nd loan and 3rd loan. More complicated is that the 3rd loan was not borrowed at the same time as the first and 2nd loan but later. All three loan belong to three different banks. Now if I win the auction, then what happen to the 2nd and 3rd loan? Are they wipe out? Especially for the 3rd loan, which was not borrowed at the same time.
Also, the owner also own some property tax, what happen to these.
Originally posted 2009-08-13 15:53:18.
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Bank auction homes are suppose to clear the titles and ALL loans leans and dept against the house are cleared. But if it’s a township auction you can be responsible for the back taxes.
Also if you need financing- be careful. We are having problems because a lot of companies will not give a bank repo house a mortgage. Easy to buy a house these days… hard to get the financing….
Good Luck.
The home we bought cost us 102,000 but it had $250,000 against it- 3 loans and they never paid the water or electric bills. Bank has to clear the title and pay for the water and eletric at closing.
The loans and the taxes owed are liens on the property. They get paid off first.
Also, is this a repo or a short sale? If it’s a straight repossession, the bank will take what they can get for the property and then use that to pay off the liens. If it’s a short sale, they still have to negotiate with the other lenders as to what they’ll take to settle the loans.
Bottom line – as the buyer, you will not be responsible for paying off the loans or back taxes. That’s the responsibility of the seller (bank or owner selling it as a short sale).
I believe that since the house was repossed, all of the other things became null. As in they shouldnt transfer to you. Now Im not 100% sure on this you could ask the bankers. They are legally required to explain all information before making you sign a contract to purchase the home. Also it should be in writing in your contract.
The secondary loans are waiting to see if the property is redeem by homeowner within the specified timeframe. If not, the title goes to the 1st lien holder. The the second and 3rd would need to file a notice of default and go thru the foreclosure process, or they could just write the loans off. This could take quite awhile to work out. Maybe you should continue looking during this period.