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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Bill here's your answer Posted by Joseph on October 02, 2006 at 7:38 AM In Reply to: Second Request for Legal Precedent posted by Bill H on September 30, 2006 at 6:43 PM The term equity is misused in the traditional sense. Net value would probably describe it better, but in my haste to write I said equity. I'll give a quick example below. As far as your comments about getting the foreclosed party's approval or offering the property to them, think about it. It makes no sense. Foreclosed parties are never going to give their permission to let the lender sell their home. Second, it would be the rare foreclosed party who could afford their home even at low as 70%. Their credit is so messed up sub-prime lenders usually won't touch them. AV $100,000 Less: Taxes & any other prior liens 2,000 Holding & Selling costs (15%) 15,000 Net 83,000 A typical lender's bidding range might be from 70% to 85% of the residual value of $83,000. Some lenders will say take the bidding to 70% and let the highest bidder have it, even if it's < 85%. Others say that the lien holder should bid it up to the 85% number. My personal opinion from experience if you do a hundred (or even dozens) of foreclosures a year, the lender is better off to stop at 70%. There are too many unforeseen problems with bad appraisals, declining market and other market conditions. Remember rare is it that the appraiser has seen the inside of the house. If I were doing a few of these a year and my personal money was in it, I would make that decision on a case-by-case basis. In most states if a lender bids to say 80% and finds that the next highest bid is 79%, he can always decide to let the lower bid take the property. One last thing if the foreclosure sale is at a central location (typically the county courthouse), then by all means drive past the property earlier that morning before attending the sale. There have been lenders that have found out too late that the structure was burned to the ground by the mortgagor the night before. Usually the P & I alone not counting the legal fees is > $83,000. Lenders almost always lose money, although mortgage insurance cover some of their pain. BTW the holding costs quite often exceed 15%, but that it a typical percentage applied. Maybe because it's easily defendable in court. In the original question the writer suggested that the lender drop the minimum bid from $300K jto $285K. That's 5% and a lot to shave off. Not sure if it's a federal law or just about universal in every state. If memory serves, the lawsuit was brought in CO if that's any help. Follow Ups: Re: Bill here's your answer Bill H 5:41 PM, 10/04/06 (2) Zero Average Joseph 6:37 AM, 10/05/06 (1) Re: Zero Average Bill H 8:57 AM, 10/05/06 (0) Post a Followup: Name : E-Mail : Subject : Comments: : The term equity is misused in the traditional sense. Net value would probably describe it better, but in my haste to write I said equity. I'll give a quick example below. : As far as your comments about getting the foreclosed party's approval or offering the property to them, think about it. It makes no sense. Foreclosed parties are never going to give their permission to let the lender sell their home. Second, it would be the rare foreclosed party who could afford their home even at low as 70%. Their credit is so messed up sub-prime lenders usually won't touch them. : AV $100,000 : Less: Taxes & any other prior liens 2,000 : Holding & Selling costs (15%) 15,000 : Net 83,000 : A typical lender's bidding range might be from 70% to 85% of the residual value of $83,000. Some lenders will say take the bidding to 70% and let the highest bidder have it, even if it's < 85%. Others say that the lien holder should bid it up to the 85% number. My personal opinion from experience if you do a hundred (or even dozens) of foreclosures a year, the lender is better off to stop at 70%. There are too many unforeseen problems with bad appraisals, declining market and other market conditions. Remember rare is it that the appraiser has seen the inside of the house. If I were doing a few of these a year and my personal money was in it, I would make that decision on a case-by-case basis. In most states if a lender bids to say 80% and finds that the next highest bid is 79%, he can always decide to let the lower bid take the property. One last thing if the foreclosure sale is at a central location (typically the county courthouse), then by all means drive past the property earlier that morning before attending the sale. There have been lenders that have found out too late that the structure was burned to the ground by the mortgagor the night before. : Usually the P & I alone not counting the legal fees is > $83,000. Lenders almost always lose money, although mortgage insurance cover some of their pain. BTW the holding costs quite often exceed 15%, but that it a typical percentage applied. Maybe because it's easily defendable in court. In the original question the writer suggested that the lender drop the minimum bid from $300K jto $285K. That's 5% and a lot to shave off. : Not sure if it's a federal law or just about universal in every state. If memory serves, the lawsuit was brought in CO if that's any help. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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