Do all foreclosures proceed as indicated in Part 2 of this series. In theory, yes, but in actuality there are many actions that can delay or cancel a foreclosure. I've seen foreclosure take place within six months of the Notice of Default being filed, and I've seen some foreclosures take over a year.
If all proceeds according to schedule, the auction will take place--on the date set, after the notice of auction has appeared for at least three weeks in a local newspaper.
Most auctions will take place on the steps of the county courthouse or other public building, on the date specified, and at the time specified. The Trustee or his representative will open the auction at the appropriate time, and all present may bid. The minimum amount of the bid is usually the amount still owed on the loan, plus the legal fees and other expenses. Sometimes there are several bidders, and bidding continues until the property is won by the highest bidder. The winner of the bid then submits a specified amount of money, usually $5,000, as a deposit. The balance of the purchase price is delivered to the trustee the following day.
HOW MUCH ARE HOMES AUCTIONED FOR? The primary lien holder (the lender) will sell the home for at least the amount of the balance owed on the loan, plus expenses that have been incurred. Sometimes this is as little as one cent over the amount. Depending on the number of bidders, it can be sold for more. If any money is collected at the auction above that minimum amount, it will be paid to the next junior lien holder (for example, the lender holding the second mortgage). There may be taxes owed, as well, which MUST be paid.
WHAT ABOUT OTHER LIEN HOLDERS? Other liens can be placed against the property, such as Mechanics Liens (a lien brought by a contractor or subcontractor against the property). These liens will be paid IF there is money left over from the sale. How likely is it that they will be paid? Well, how often will people pay more at auction than they NEED to? Being in second or third position as a lien holder is not a good place to be. There is seldom any money left to give the homeowner
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