Is it legal for banks/mortgage lenders to sell a foreclosure for more than what's owed?($19,000)

Question

Is it legal for banks/mortgage lenders to sell a foreclosure for more than what's owed?($19,000)

Answer 1

This depends on what stage of foreclosure the property is in!  If the home is up for auction, they can sell it for however high people will bid.  Of course, auction is different from a short sale, which would occur on the time line BEFORE the property got to auction.  Once a bank forecloses on your property, they want to get it off their hands as quickly as they can, because it is a liability to them, but there is nothing that says that they cannot sell for a profit.  It is simply difficult for them to do so, because real estate investors are looking to these "motivated sellers" for low prices.  The bank owns the house after a foreclosure... so think of it this way... if you had a mortgage on the home for $19,000 and you were up to date on the payments, but YOU wanted to sell the home for more than it was worth, could you?  Of course you could, because you owned it.  You would at least be asking for the fair market value!

Answer 2

check out http://www.lemonshell.com/legal/foreclos...

Answer 3

The bank can ask whatever they want for the property.  Once it has been foreclosed upon, they own it.

Answer 4

Yes, why didn't you think it was?

Keep in mind, what is left over has to be returned to the homeowner.

Answer 5

Yes.

Answer 6

YES, they are allowed to get the value of the home- the bank needs to make money too- they have to pay their employees.....

I don't understand why so many people think they can buy a house for just what is owed?  It cost the bank money to foreclose on the house- they have to pay the outstanding bills like water and gas...... It cost that bank more money then what you think to close on it.

Answer 7

If the bank gets less than the amount owed int he sale, it can keep chasing the homeowner for the deficiency.  

Answer 8

Of course it is legal.  The bank will doubtless have additional expenses (legal and otherwise) involved in foreclosing the house which raise the costs including the total of the outstanding loan.

There is nothing which says a lender must sell for only what is owed.

Answer 9

Yes.

Once the bank/lender owns a property, it can sell it for as much or as little as it likes. And if the property is worth more than what's owed, it can sell it for more.

However, if you're in a situation where there's a lot of equity in the property, and it hasn't gone to foreclosure yet, you'd be better off listing it with a Realtor or using a "We Buy Houses" service.

For example, suppose the house is worth $100,000 and there's a $19,000 mortgage. A Realtor might list the house for, say, $90,000 to get a quick sale for you. After commissions and other expenses, you'd end up with roughly $81,000. Subtract the $19,000 you owe, and you'd pocket about $62,000. The only difficulty there is that it might take a little while, even with a low price, to go through the complete transaction--30-45 days.

With investors who buy for all cash in 10-14 days, the only additional question they'd need to know is how much the house needs in repairs. Let's say $10,000. Using the same scenario, assuming the house would be worth $110,000 in fixed-up condition, an investor would offer you about $55,000. After taking care of the mortgage, you'd end up with about $36,000 in cash in 10-14 days and avoid foreclosure.

So, if there's time, use a Realtor. If there's no time, go with a "We Buy Houses" company.

Hope that helps.