House was foreclosed, auctioned off... now what?
March 31, 2017 7:20 AM Subscribe
My wife and I own a property in California, but live elsewhere. Long story cut short, we got into a financial pickle, and the house was foreclosed and sold at auction. What happens next?
Specifically, I believe that the house sold for more than the amount of the outstanding loan, so I would like to see if we can get hold of the surplus amount.
A few specifics
- Not interested in the whole blame thing: it happened, we were idiots, trying to move on.
- Post-auction, I have had no contact from the mortgage company, the trustees doing the sale, etc. I only found out that it sold by calling the auction info line and asking them.
- So far, nothing has been recorded in terms of property deeds, etc.
- I don't want to get lawyers involved. It's only a few thousand, so I don't want to end up paying more in fees than it actually gets us.
- The auction was just over a month ago.
A few specifics
- Not interested in the whole blame thing: it happened, we were idiots, trying to move on.
- Post-auction, I have had no contact from the mortgage company, the trustees doing the sale, etc. I only found out that it sold by calling the auction info line and asking them.
- So far, nothing has been recorded in terms of property deeds, etc.
- I don't want to get lawyers involved. It's only a few thousand, so I don't want to end up paying more in fees than it actually gets us.
- The auction was just over a month ago.
You need to ask a real estate lawyer about this --- there's a very good chance you do not have any rights to the extra money.
I'm in Virginia; the person who bought my fathers house after his death ended up defaulting on the loan. She was foreclosed on by the bank, but the bank couldn't resell the house until they also got the legal title --- foreclosure alone didn't give them a clear title, there were several additional legal hoops to go through. So my guess is that by the time your house was sold, you no longer had any ownership in the house; and so the amount it sold for, whether above or below the amount you owed on your defaulted loan, has nothing to do with you.
YMMV in your state, of course, which is why I think you need to talk to a lawyer who knows that areas real estate laws. Sorry.
posted by easily confused at 7:49 AM on March 31, 2017 [3 favorites]
I'm in Virginia; the person who bought my fathers house after his death ended up defaulting on the loan. She was foreclosed on by the bank, but the bank couldn't resell the house until they also got the legal title --- foreclosure alone didn't give them a clear title, there were several additional legal hoops to go through. So my guess is that by the time your house was sold, you no longer had any ownership in the house; and so the amount it sold for, whether above or below the amount you owed on your defaulted loan, has nothing to do with you.
YMMV in your state, of course, which is why I think you need to talk to a lawyer who knows that areas real estate laws. Sorry.
posted by easily confused at 7:49 AM on March 31, 2017 [3 favorites]
If it's only a few thousand, my guess would be that they paid their lawyers at least that much to process the paperwork for the foreclosure.
posted by ethidda at 8:45 AM on March 31, 2017 [2 favorites]
posted by ethidda at 8:45 AM on March 31, 2017 [2 favorites]
If you haven't talked to the mortgage company since the sale, that would be the place to start. They have not contacted you yet, but you may be surprised what they tell you when you contact them. If you don't like what you hear, then you can seek out legal advice from professionals - not Metafilter.
posted by soelo at 8:49 AM on March 31, 2017
posted by soelo at 8:49 AM on March 31, 2017
Consider that if it's just a few thousand, that would likely be eaten up by property tax, insurance, utilities, maintaining the property, fees related to the sale, late fees, etc.
posted by pecanpies at 8:55 AM on March 31, 2017 [4 favorites]
posted by pecanpies at 8:55 AM on March 31, 2017 [4 favorites]
If you don't want a lawyer, you're not getting a dime of that money. Cut your losses and move on.
posted by notjustthefish at 9:33 AM on March 31, 2017 [6 favorites]
posted by notjustthefish at 9:33 AM on March 31, 2017 [6 favorites]
Generally the bank cannot sell a house until they have clear title.
The foreclosure usually gives them clear title. In foreclosure, the bank becomes the new owner and the foreclosed person becomes a former owner.
If the auction happened after the foreclosure was final, it is likely you no longer had any rights to own/possess/occupy the home and have no rights to the proceeeds of the sale.
Check with an attorney that all of the foreclosure paperwork was properly filed. Incorrect paperwork is the most common way for a consumer to get rights back on a foreclosed home.
posted by littlewater at 12:15 PM on March 31, 2017
The foreclosure usually gives them clear title. In foreclosure, the bank becomes the new owner and the foreclosed person becomes a former owner.
If the auction happened after the foreclosure was final, it is likely you no longer had any rights to own/possess/occupy the home and have no rights to the proceeeds of the sale.
Check with an attorney that all of the foreclosure paperwork was properly filed. Incorrect paperwork is the most common way for a consumer to get rights back on a foreclosed home.
posted by littlewater at 12:15 PM on March 31, 2017
Very often, what happens is
- The house is put up for auction. The bank puts in a bid in the amount of its debt, plus recoverable costs.
- No one submits a higher bid. The bank gets the house.
- Then the bank sells the house for something close to fair market value.
If this happens, there is no surplus to go to the former owner. The profit from the sale goes to the bank and the former owner gets nothing.
In my state, and I think in most if not all, there is a redemption period during which the former owner can pay what is owed and get the land back. That redemption period is sometimes quite short when the home was abandoned - i.e., the owner did not live there.
posted by yclipse at 1:48 PM on March 31, 2017
- The house is put up for auction. The bank puts in a bid in the amount of its debt, plus recoverable costs.
- No one submits a higher bid. The bank gets the house.
- Then the bank sells the house for something close to fair market value.
If this happens, there is no surplus to go to the former owner. The profit from the sale goes to the bank and the former owner gets nothing.
In my state, and I think in most if not all, there is a redemption period during which the former owner can pay what is owed and get the land back. That redemption period is sometimes quite short when the home was abandoned - i.e., the owner did not live there.
posted by yclipse at 1:48 PM on March 31, 2017
Leaving aside whether you have the right to the money or not, the bank is vanishingly unlikely to just give you the proceeds without legal action. You might consider consulting with a lawyer to see what your rights here are and whether it's worth pursuing a claim.
posted by Aleyn at 6:04 PM on March 31, 2017
posted by Aleyn at 6:04 PM on March 31, 2017
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posted by corb at 7:33 AM on March 31, 2017