Anyone ever worked with a bank to purposefully foreclose on a property? (1 Viewer)

[BarrieJ3]

Just a quick question in case anyone has ever done this, wanted to see how it went, obviously via pm or text.

Not super common so not a ton of info online, Reddit, etc. The lawyers can speak of and to it, but since it really depends on bank to bank and their willingness to work together, they don’t have much insight. Just trying to see if anyone’s done this to see what the process, outcome, and long term effects looked like.

Or if anyone sees resources that cover this, really not seeing a ton via Google fu.

(nothing crazy, someone’s going through a process with squatters)

 

[acezag]

I knew someone who bought a house 4 months before the Great Recession, and watched the value drop 50+% below what they'd just paid basically overnight.

They attempted a short sale, then just walked away. Everyone told them it would be a financial death sentence. They waited some years, and then had little trouble getting into another mortgage, and four more since. So it was surprising how little the banks seemed to care that they'd walked on a full loan.

 

[BamaT8ter]

If you’re looking to just surrender the property, maybe investigate a deed in lieu.

 

[BarrieJ3]

If you’re looking to just surrender the property, maybe investigate a deed in lieu.

Yeah, this! They’re looking at this, but the holdover tenants/squatters are what pose the issue.

That makes the whole process a bit murky and messy, since there’s still a required eviction process which the bank would take over while the owners still maintain legal responsibility for property during. Seems semi unique of a situation since there’s not a ton of info online.

 

[Budha]

I do know a bit about this. There is generally no reason to voluntarily foreclose if they aren’t already behind as anyone would be better served simply selling it.

Unless it’s a scenario were they are under water such as was common during/after the 2007 crash. In those cases, you could explore a short sale which requires approval from your lender.

 

[BarrieJ3]

I do know a bit about this. There is generally no reason to voluntarily foreclose if they aren’t already behind as anyone would be better served simply selling it.

Unless it’s a scenario were they are under water such as was common during/after the 2007 crash. In those cases, you could explore a short sale which requires approval from your lender.

They’re still in early research mode. Was looking at numbers of it all - losses already total over $30k.

Working through removing the squatters/holdover tenants could cost an additional $30k+, and that’s if the place wasn’t destroyed. Then start adding up all the repair costs and costs to sell, and that’s where deed in lieu came into thought. The final numbers on a sale would be about equal to what they owe - it’s just the process to get there could be literally 6 more months before even getting listed.

 

[Budha]

Oof - there are squatters. What state is this in?

Is the loan a FNMA or Freddie loan?

 

[BarrieJ3]

Oof - there are squatters. What state is this in?

Is the loan a FNMA or Freddie loan?

CA and asked on loan type.

And yeah. Googled, asked lawyer, etc. on all the various options that might be possible - can’t really find any.

Thought even just taking a hit and selling for cheap to like an Opendoor or such, no luck. Occupants apparently can make it difficult for current owners, new owners even if large company, lenders, anyone.

 

[LotsOfChips]

Does the owner have up to date fire insurance? (Not suggesting that a fire would solve a lot of problems, but a fire would solve a lot of problems)

 

[triton]

Squatters can be brutal. Lawyers can comment better than I on whether it makes sense to start the eviction process. Suggest the owners also work with a local CPA to make sure there are no foot faults w/r/t taxation on debt forgiveness from the deed in lieu transaction, etc.

 

[Budha]

CA and asked on loan type.

And yeah. Googled, asked lawyer, etc. on all the various options that might be possible - can’t really find any.

Thought even just taking a hit and selling for cheap to like an Opendoor or such, no luck. Occupants apparently can make it difficult for current owners, new owners even if large company, lenders, anyone.

Yes, squatters can be brutal - especially in CA.

Sent you a DM