Q about Foreclosure Data in Pub Record.

[Metamorphic]

When you're looking at the deed history in pub record for a foreclosed property. They usually show it as a "trustees deed" with a trasnfer from somebody like "reconstrust" to Bank of New York", with an ammount.

First Q. What does that dollar value represent? Is it the loan balance (principal +interest or just principal), is it some portion of loan balance, is there any markup, is it some sort of estimated value or portion of the balance, etc?

Second Q Who is that seller? Where do they come from, what do they do?

TIA

 

[Howard Klahr]

California is a Deed of Trust state. A Deed of Trust while similar to a mortgage contract, a deed of trust involves a third party called a trustee, who acts on behalf of the lender. When you sign a deed of trust, you are in effect giving the trustee title (ownership) of the property, but the Borrower retains the right to use and live in it. The lender or trustee holds the original deed of trust until you repay the loan on your home. Unlike a mortgage, a deed of trust also gives the lender the right to foreclose on your property without taking you to court first.

To further answer your questions, the party you see in the public records is the trustee.

The amount recorded is the amount paid at the foreclosure sale. This amount may or may not relate to the outstanding balance.

 

[jeanwillick]

You might want to have a discussion with your Register of Deeds.

 

[Kevin A. Spellman]

Here in MA a lender has three steps to achieve to record a foreclosure deed. Most attorneys will record the advertisement of the petition to foreclose and then ask the court for a judgment to exercise the foreclosure and then will record the judgment.

Now comes the tricky part. Here in MA the lender who takes a title at a foreclosure are currently not recording a foreclosure deed until it either sells or it is selling the title to another lender or management department of a clearing house.

Here in MA the lender typically bids the property above the all other bidders that are typically bidding well below market prices. The lender representative has the maximum amount he or she is allowed to bid. These amounts typically approach or exceed a reasonable price. In the event the bid goes beyond the pre-approved bid it could be awarded to a private bidder, but this is rare her in MA. The recorded price on a foreclosure deed is a pre-determine price the lien holder was instructed to bid and is not based upon other bidders after being awarded the winning bid.

 

[Metamorphic]

California is a Deed of Trust state. A Deed of Trust while similar to a mortgage contract, a deed of trust involves a third party called a trustee, who acts on behalf of the lender. When you sign a deed of trust, you are in effect giving the trustee title (ownership) of the property, but the Borrower retains the right to use and live in it. The lender or trustee holds the original deed of trust until you repay the loan on your home. Unlike a mortgage, a deed of trust also gives the lender the right to foreclose on your property without taking you to court first.

To further answer your questions, the party you see in the public records is the trustee.

The amount recorded is the amount paid at the foreclosure sale. This amount may or may not relate to the outstanding balance.

I'd forgotten that little tid bit about the trustee holding deed in ca. Makes much more sense now.

I still dont quite get where the money is going however. When you say the recorded amount is the amount paid at the foreclosure sale it doesn't quite make sense. Presumably the loan gets bundled, run through a gse and eventually bought as a package of securities by some investor. I thought what when the dafault occurs, they foreclose and get title. I dont see why they're paying the trustee anything beyond a handling fee.

 

[Howard Klahr]

A foreclosure action in a deed of trust state is a non-judicial foreclosure. Basically a sale date is set and the property is sold on the courthouse steps (or whatever place is customary in that locale). The proceeds paid at the foreclosure sale are paid to the trustee who is acting on behalf of the lender/benificiary of the deed of trust agreement. The trustee then transfers the proceeds to the lender/benificiary. The trustee is only acting as a middleman under the terms of the trust agreement.

The packaging of the loan into a securitization is not relevant to the foreclosure process. It is how the money is distributed after the foreclosure where the "ownership" of the loan comes into place.

 

[John Hassler]

For being 3,000 miles away Howard it spot-on about the CA process!

Just a few other notes.

As Howard said, the Trustee auctions off the house to satisfy the terms of the Deed of Trust. The Lender can instruct the Trustee to start the bidding at an amount less than what is owed to satisfy the DoT. At the auction all bidders must, with rare exception, have cash or a cahsier's check(s) in their posession to bid except for the lender who can "credit bid" up to their outstanding loan amount before needing cash/CC. Typically the Lender is the only bidder if there is only moderate, or negative, Borrower equity with the outstanding loan amount (full credit bid) shown as the purchase price.

Also, I've found it sometimes impossible or difficult to determine through some appraiser-type data sources if it was a senior or junior lein for which the Trustee's Deed was issued. This may mean the property was purchased with senior leins still against the property.

 

[Metamorphic]

FTypically the Lender is the only bidder if there is only moderate, or negative, Borrower equity with the outstanding loan amount (full credit bid) shown as the purchase price.

So if you're looking at a number like $ 186,426.43 your probably looking at the outstanding loan balance, but if its $190,000, some 3rd party bought it for a price above what the loan balance was?

 

[Howard Klahr]

No, the loan amount is not the primary focus here. If the price was $190,000 then the outstanding loan amount could have been $195,000. Also, the lender includes all costs in the outstanding balance (i.e. late fees, penalties, costs of collection, legal fees,etc) Therefore, the outstanding balance can even exceed the original loan amount is certain situations.

You will know if a thrid party acquired the property only if the Grantee/Buyer is not the Bank or Trustee. Either way, this transction is not armslength nor without undue influence and therefore this would not reflect typical market conditions.

John - the way to find all liens is thru a title search whether you perfom it your self (search county records) or from a title company.