Michigan Mortgage Warning: Auctions Can Be Tricky
As more and more Michigan mortgage holders suffer through increased on interest rates and are forced to foreclose on their homes, others are swooping in to buy at low, low prices. But be warned:
Buying foreclosed property is not for novices.
“There are horror stories,” said Special Deputy Jimmy Moore, who auctions off bad credit mortgage foreclosures every week at the Washtenaw County Courthouse. “There have been a lot tears.”
He said he knows of a case where a couple bought a house at a real estate auction. Later, it burned to the ground. Because they couldn’t insure something they don’t yet own - and there’s a six- to 12-month redemption period before they take ownership - they lost everything except for the value of the land.
It’s also possible for someone to pay $100,000 for a house only to learn later that the federal government has a $150,000 tax lien on the residence, Moore said. Unless the new homeowner comes up with the taxes, he’s out $100,000.
Moore said it’s important to check on the history of the house at the county’s register of deeds, and check with the IRS - a process he admits could take hours - to find out if there’s a tax lien on the house. “And don’t buy anything you can’t really afford,” he said.
There aren’t many private buyers at the sales, Moore said, because there really aren’t many great deals as there were years ago due to the fact that most have little home equity.
Washtenaw County Treasurer Catherine McClary said the sharp increase in the number of property foreclosure inserts in the Washtenaw County Legal News, where the first listing of at-risk properties occurs, verified concerns about an increased trend in tax delinquencies, a leading indicator of home loan defaults to come.
“You would think Washtenaw County would be healthy and immune from some other areas of state, but we’re seeing six to seven new insertions every business day. It’s a huge amount,” she said.
Earlier this month, the county board unanimously authorized the creation of another property tax foreclosure prevention specialist in McClary’s office to specifically handle the increased foreclosure case-load last year and anticipated increases this year.
Kip Sen of Northfield Township showed up at a recent foreclosure auction, hoping he’d walk out with a new house. He has had his mind on a Dexter Township house since reading about it in a foreclosure notice. It’s in good shape, on several acres in Dexter Township and was available at a low price.
After trying unsuccessfully to reach the owners to discuss a preforeclosure deal, Sen showed up early for the county’s foreclosure auction. The homeowners had come up with the $15,000 they owed on the house, which was then removed from the auction list.
Sen says he’ll be back. After all, the foreclosure numbers show no signs of abating any time soon, as bad credit home loans and related increased in mortgage rates continue to bog down the market.
“It’s like a lottery,” said the Northfield Township engineer. “If you don’t try, you won’t get it.”
SOURCE: Ann Arbor News