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Author Topic: Buying foreclosed tax auction homes  (Read 864 times)

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Offline Meg

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Buying foreclosed tax auction homes
« on: December 17, 2021, 10:38:18 AM »
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  • Not sure how ethical it is to buy foreclosed homes that are being foreclosed due to non-payment of taxes. Buying such homes could displace a family in need.

    However, some of the homes that are being foreclosed on are uninhabited. Across the street from our little piece of undeveloped property in eastern WA is a scary fixer that went up for auction last month. A neighbor told me when it was going to be auctioned, so I joined the public auction website in order to watch the bidding process. I was surprised at how many people bid on that place. The opening bid started at $2,700.00 (the total amount of back taxes). It ended up with the price of $25,000.00. I was glad to find out that a young man who grew up in the town (semi-ghost town out in the middle of nowhere) and still lives there bought it. The house has big problems: the septic doesn't work, the well dried up years ago, and there's a gaping hole in the roof and mold in the area of the house where water got in. But still, a solidly built house, built about 1930. It will be a decent place when fixed up.

    So if anyone is interested in buying county surplus tax auctioned homes or undeveloped land, you can view property in various states from the public surplus website. Cash is required for all purchases.

    https://www.publicsurplus.com/sms/browse/home
    "It is licit to resist a Sovereign Pontiff who is trying to destroy the Church. I say it is licit to resist him in not following his orders and in preventing the execution of his will. It is not licit to Judge him, to punish him, or to depose him, for these are acts proper to a superior."

    ~St. Robert Bellarmine
    De Romano Pontifice, Lib.II, c.29

    Offline josefamenendez

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    Re: Buying foreclosed tax auction homes
    « Reply #1 on: December 17, 2021, 04:20:09 PM »
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  • Thanks. That's a great website


    Offline Mark 79

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    Re: Buying foreclosed tax auction homes
    « Reply #2 on: January 04, 2022, 11:12:38 PM »
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  • Interesting that so many of the properties are in WA and MN. I wonder if those regions are particularly aggressive in seizing properties.

    Offline Meg

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    Re: Buying foreclosed tax auction homes
    « Reply #3 on: January 05, 2022, 09:08:35 AM »
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  • I too was wondering about the high numbers of tax foreclosures in Washington, especially the one county where we have property. The county can foreclose after non-payment of taxes for three years, but I don't know if this is a state-wide policy (probably is), or how many states do this. I don't think it's right or good for the county to foreclose after only three years of non-payment of taxes, though some of the properties hadn't been developed at all. 
    "It is licit to resist a Sovereign Pontiff who is trying to destroy the Church. I say it is licit to resist him in not following his orders and in preventing the execution of his will. It is not licit to Judge him, to punish him, or to depose him, for these are acts proper to a superior."

    ~St. Robert Bellarmine
    De Romano Pontifice, Lib.II, c.29

    Offline SimpleMan

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    Re: Buying foreclosed tax auction homes
    « Reply #4 on: January 05, 2022, 01:14:21 PM »
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  • Not sure how ethical it is to buy foreclosed homes that are being foreclosed due to non-payment of taxes. Buying such homes could displace a family in need.

    However, some of the homes that are being foreclosed on are uninhabited. Across the street from our little piece of undeveloped property in eastern WA is a scary fixer that went up for auction last month. A neighbor told me when it was going to be auctioned, so I joined the public auction website in order to watch the bidding process. I was surprised at how many people bid on that place. The opening bid started at $2,700.00 (the total amount of back taxes). It ended up with the price of $25,000.00. I was glad to find out that a young man who grew up in the town (semi-ghost town out in the middle of nowhere) and still lives there bought it. The house has big problems: the septic doesn't work, the well dried up years ago, and there's a gaping hole in the roof and mold in the area of the house where water got in. But still, a solidly built house, built about 1930. It will be a decent place when fixed up.

    So if anyone is interested in buying county surplus tax auctioned homes or undeveloped land, you can view property in various states from the public surplus website. Cash is required for all purchases.

    https://www.publicsurplus.com/sms/browse/home
    I wouldn't want to put a family out on the street either, but by the time it gets to that point, the home is usually vacant anyway, and very often you can't even find the people.  It would be kind of strange for someone to be able to pay their mortgage (assuming they have one) but not be able to pay the taxes, and besides, the lenders either have to get the tax and insurance payments from the borrower to put in escrow, or the borrower has to provide proof of T&I having been paid.  So if there's a mortgage, it's pretty much a fail-safe situation that T&I will get paid somehow.  The usual scenario is that the borrower can't make their monthly mortgage payments --- at which time the entire amount becomes due and payable, you can't make partial payments (people try this, but the payments can't be applied without the collections department putting together some kind of plan, the goal being to bring them current in X number of months) --- they fall far enough behind that foreclosure becomes more and more of a reality, and they vacate the premises, leaving it up to the lender to maintain the property, pay T&I out of pocket, and so on.  No lender wants to see a delinquent property get sold for taxes, and they certainly don't want to see the house burn down without insurance and be left with land and a teardown (unless it's someplace like San Francisco, where the land is what's dear).  But if they own the home free and clear, yes, theoretically they could lose the home for non-payment of taxes.  

    As I told our director one time, people who make their payment (including T&I) every month without fail, are a "cash cow", they never cause a problem, and on average the servicer (the entity who processes payments) pockets about $30 per month in service fees without working up a sweat.  (But you have to pay your people and your overhead out of that $30, which is why they are so niggardly about hiring more people, economies of scale, you know.)  The one to three percent who don't, that's where all the headaches come from.  Kind of like the shepherd leaving the 99 sheep to go look for the one that has wandered off.


    Offline Yeti

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    Re: Buying foreclosed tax auction homes
    « Reply #5 on: January 05, 2022, 07:33:20 PM »
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  • Not sure how ethical it is to buy foreclosed homes that are being foreclosed due to non-payment of taxes. Buying such homes could displace a family in need.


    No, this is certainly not the concern of someone buying such a property. And as Simple said, the people are probably vacated before the house is put on the auction block.

    Offline SimpleMan

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    Re: Buying foreclosed tax auction homes
    « Reply #6 on: January 05, 2022, 08:05:20 PM »
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  • No, this is certainly not the concern of someone buying such a property. And as Simple said, the people are probably vacated before the house is put on the auction block.
    The only way it could ever happen, is if the homeowners held the property free and clear, unencuмbered by any mortgage, but for whatever reason, had not kept their taxes current.  As I explained above, and I worked in the industry for many years, it would never get to the point of a mortgaged property being forfeited for failure to pay taxes.  The mortgage lender isn't going to allow a tax lien to get out in front of the mortgage lien --- they would advance funds to pay the taxes current, and would then go back on the borrower to repay what they had advanced.  Taxes and insurance (T&I) are not permitted to go delinquent by the mortgage lender, because if taxes are not paid, and the house is auctioned off at a tax sale, then the lender loses the very thing that is securing their loan.   (And they're not about to take the chance of an uninsured house burning down either, so they'll advance funds to keep the insurance paid.)

    Offline Mark 79

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    Re: Buying foreclosed tax auction homes
    « Reply #7 on: January 05, 2022, 11:16:19 PM »
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  • How have I lived this long and not known such key facts for life under (((usurers)))? Though it makes perfect sense I would never have guessed that the usurers would "send good money after bad," but I can see that they would not want to lose even a single [imaginary] decimal point.


    Offline SimpleMan

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    Re: Buying foreclosed tax auction homes
    « Reply #8 on: January 05, 2022, 11:39:44 PM »
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  • How have I lived this long and not known such key facts for life under (((usurers)))? Though it makes perfect sense I would never have guessed that the usurers would "send good money after bad," but I can see that they would not want to lose even a single [imaginary] decimal point.
    No, they don't want to lose the security behind the mortgage (i.e., the home and land) to a tax lien that takes precedence over all other liens, but neither do they want to foreclose --- neither the corporate lenders, nor the government-chartered lenders such as FNMA and Freddie Mac, want to come into possession of homes.  Then they just have to turn around and sell them.  Nobody wins in a foreclosure.  Typically they will "work with someone" from six months to a year and even longer, and some delinquent borrowers know this, and work it to their own advantage.  Foreclosure is truly a last resort. 

    Yes, in theory, strict letter of the contract, the entire amount becomes due and payable one day after a payment is missed, but in actual practice, it drags out for a long time, during which time, many borrowers will send a little bit of what is due, or one month's payment where two are due, and so on, under the rubric of "it's not as though we're not paying at all, we're paying what we can".  Sometimes they will call and ask if they can skip a payment and put it "on the back", i.e., extend the payment term.  Can't do that either.  Again, lenders bend over backwards, and put up with every form of shenanigans you can imagine (I've seen it all!), to prevent a foreclosure.  Again, it's a last resort.

    Offline Meg

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    Re: Buying foreclosed tax auction homes
    « Reply #9 on: January 06, 2022, 12:41:33 AM »
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  • No, this is certainly not the concern of someone buying such a property. And as Simple said, the people are probably vacated before the house is put on the auction block.

    While I don't think it can be assumed that all tax auctioned properties are always vacant, they usually are, from what I could tell when following several properties during the auction process. It seemed that no mortgage was outstanding on most of properties up for auction. Since they are for the most part vacant, it can be a good value to purchase one of these properties, as long as it can be assumed that the property tax will be paid by the buyer in future, since the county in question where the property was sold has no qualms about foreclosing on a home for not paying taxes. The county assessor can usually be contacted to find out more about a particular property.
    "It is licit to resist a Sovereign Pontiff who is trying to destroy the Church. I say it is licit to resist him in not following his orders and in preventing the execution of his will. It is not licit to Judge him, to punish him, or to depose him, for these are acts proper to a superior."

    ~St. Robert Bellarmine
    De Romano Pontifice, Lib.II, c.29

    Offline Meg

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    Re: Buying foreclosed tax auction homes
    « Reply #10 on: January 06, 2022, 12:42:30 AM »
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  • I wouldn't want to put a family out on the street either, but by the time it gets to that point, the home is usually vacant anyway, and very often you can't even find the people.  It would be kind of strange for someone to be able to pay their mortgage (assuming they have one) but not be able to pay the taxes, and besides, the lenders either have to get the tax and insurance payments from the borrower to put in escrow, or the borrower has to provide proof of T&I having been paid.  So if there's a mortgage, it's pretty much a fail-safe situation that T&I will get paid somehow.  The usual scenario is that the borrower can't make their monthly mortgage payments --- at which time the entire amount becomes due and payable, you can't make partial payments (people try this, but the payments can't be applied without the collections department putting together some kind of plan, the goal being to bring them current in X number of months) --- they fall far enough behind that foreclosure becomes more and more of a reality, and they vacate the premises, leaving it up to the lender to maintain the property, pay T&I out of pocket, and so on.  No lender wants to see a delinquent property get sold for taxes, and they certainly don't want to see the house burn down without insurance and be left with land and a teardown (unless it's someplace like San Francisco, where the land is what's dear).  But if they own the home free and clear, yes, theoretically they could lose the home for non-payment of taxes. 

    As I told our director one time, people who make their payment (including T&I) every month without fail, are a "cash cow", they never cause a problem, and on average the servicer (the entity who processes payments) pockets about $30 per month in service fees without working up a sweat.  (But you have to pay your people and your overhead out of that $30, which is why they are so niggardly about hiring more people, economies of scale, you know.)  The one to three percent who don't, that's where all the headaches come from.  Kind of like the shepherd leaving the 99 sheep to go look for the one that has wandered off.

    Thank you for all of this good and useful information! I've learned a lot. 
    "It is licit to resist a Sovereign Pontiff who is trying to destroy the Church. I say it is licit to resist him in not following his orders and in preventing the execution of his will. It is not licit to Judge him, to punish him, or to depose him, for these are acts proper to a superior."

    ~St. Robert Bellarmine
    De Romano Pontifice, Lib.II, c.29