what happens to a foreclosed house that doesn't sell on the auction block?

Question

I have a subprime loan, mortgage went up an additional $1000.00 a month, and my income has changed for the worse, and I am upside down in the mortgage and can't re-finance. The mortgage company tells me I owe $323,500 which includes costs. My mortgage balance was $299,000 before I defaulted 7 mos. ago. Costs seem excessive ($23,500). More then likely the house won't sell. Other then a bankruptcy, what are my options?

Answer 1

If the default was a result of the increase in your mortgage payment and you were current prior to that, check with a local lender that does FHA Secured Loans. This is a new product that came out to help people in your situation. Check it out. But even filing bankruptcy will only delay the trustee sale, but every day your loan is in default the greater the legal fees become. Can you rent rooms out in your house to help you get caught up?

Also double check with your servicer to see if they now have a workout program or reverse type mortgage. Especially if it's Countrywide they have many workout programs now.

Last resort would be to put the house up for sale as a short sale. Your bank will have to agree to this. Be sure to find a realtor who has been through a cycle like this and that is very familiar with short sales and pricing your home right.

Good luck.

Answer 2

The costs involved are far from excessive. Lenders use legal firms to process and file all the required paperwork needed to effect a foreclosure. Since the amount of such work is far from small, one can expect a sizeable charge for such work, in addition to the interest and penalties which have accrued since you initially defaulted.

If the house does not sell at public auction for a price sufficiently high to satisfy the lender, the lender will purchase the home at the auction and take possession (which is by far the most common outcome of such foreclosure auctions). Once the lender is in possession of title, the house will most probably be listed for sale with a real estate firm.

Answer 3

During the trustee sale, if a private owner doesn't purchase it then it becomes a bank owned home.
It seems you are waiting to see what happens at the sale. If the bank ends up with the home then a realtor is assigned to sell it. Usually the Realtor will offer you "cash for keys" to save the expense of evicting you. Amounts vary but it's usually about $1000 to $1500. Not much but it pays moving expenses.