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  1. #1
    Join Date
    Nov 2011

    Default Is a Buyer of a Foreclosure at a Courthouse Auction Responsible for Any Liens or Debt

    State of NY ( upstate )

    I'm looking into purchasing a foreclosure that is being sold by a "trustee" at a courthouse auction. I did some research on the property (via RealtyTrac), and it seems like there were quite a few loans taken on the property. From the records there appear to be 3 mortgages (assuming 2 are refinances) the for around 314k. Also, there appear to be 3 HELOCs on it for varying amounts. The last HELOC is in 2008 for 64k. Can't tell for sure but It appears that the foreclosure was initiated by the 64k loan which seems kinda strange since it was the last loan issued. I know this scenario is not for the faint of heart, but I want to do my due diligence to figure out how to deturmin what the risk would be in purchasing this property

    Let's say I do a title search, and the title comes up clear without liens. Now let's say that I go to the auction and bid on the property, and my bid is accepted. Am I in the clear once I pay the cash, or is there still the possibility of getting screwed? From what I understand, everything is subordinate to the primary mortgage or loan, any proceeds go to that, and if there are additional funds left, the money goes toward those loans. Also from what I've read the HELOC loans are actually still on the individual even after foreclosure. So other than the possible condition of the structure, and the potential difficulties with owner occupation, are there any hidden pitfalls? If there are no current liens on the property, is there any way that I would owe additional money after foreclosure? The information I have read so far is very confusing. Some says that I would / could be on the line for the second mortgage, some say I wouldnt. Also I'm not sure if a defaulted loan automatically becomes a lein. I'm also unclear, just becuase there is the record of a number of loans and mortgages, how can I find out how much of them was actually paid off? or is this part of the tittle search?

  2. #2
    Join Date
    Oct 2014

    Default Re: If I Buy a Foreclosure at Courthouse Auction, Am I in Any Way Responsible for Deb

    You really ought to consult a lawyer in NY familiar with foreclosure proceedings. NY uses a judicial foreclosure process, but the details of that matter a lot. In some states, the judicial foreclosure will wipe out all liens on the property (other than federal liens, property tax liens, and perhaps other state tax liens) and in others it just wipes out all the liens junior to the foreclosing lien. I do not know the details of what interests might survive a foreclosure in NY. But you need to know exactly what liens survive and which do not, as well as what risks you take in buying a property in foreclosure. The fees you pay for expert advice are good insurance against potentially buying into a disaster and losing a lot of money.

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