A couple in Orlando, Florida thought they got the deal of their life. They went online to the Orange County official foreclosure auction website and found the perfect home to bid on. They filed all the prerequisite paperwork and then put in their bid. They anxiously waited to see if their bid was accepted. They were jumping for joy when they learned they had won the bid and gotten the home for $16,000!
They knew the home they bid on was in foreclosure, but there was a lot they didn’t know.
The “old” owners, Kenneth Delisi and his wife, had been making their mortgage payments to Bank of America but couldn’t pay one month of the HOA dues. The HOA was very strict and foreclosed on them after the one missed payment. Kenneth and his wife were still living in the foreclosed home.
The unsuspecting bidding couple had paid the $70. presale fee the day before the auction and the $16, 000 by noon the day after they placed the winning bid. Other fees associated with the winning bid were also paid as required.
Unfortunately for the couple, when they went to their new home, the Delisi’s were still living there. They would have to pay thousands of dollars to start eviction proceedings against the “old” owners. The Delisi’s had no place to go if they moved out and had stayed in the home.
The “new” owners found out, along with the $16,000 they paid for the home, Bank of America had filed foreclosure again the Delisi’s. The “new” owners also owed Bank of America another $200,000 for the unpaid mortgage, thousands more in unspecified fees associated with foreclosure and all the unpaid HOA fees. Their unbelievable $16,000 home turned out to be not such a bargain.
Besides being stuck with evicting the “old” owners, they now own a home they can’t afford. Legally, they’re responsible for all the debts associated with the home.
The website home page had a sentence posted saying anyone participating in the auction should research the property and the laws governing the foreclosure process.
In Colorado, there are two main types of foreclosures 1) the Public Trustee Foreclosure wherein foreclosure auctions are conducted by the office of the Public Trustee and, 2) The Judicial Foreclosure.
Most foreclosure auctions are usually administered through the county Public Trustee rather than through the courts. The auctions are held weekly. Each participant bidding is responsible to complete their own research before coming to the sale. The Public Trustee doesn’t guarantee the deed being foreclosed on is a first lien.
A judicial foreclosure is conducted through the court system on a mortgage, deed of trust or judgment. The Judicial Foreclosure is employed when no power of sale clause (Public Trustee) is included in the security instrument.
The Public Trustee is not included in the Deed of Trust in Colorado. The lender must sue the borrower and go through the courts to obtain an order to foreclose. Once the court orders the foreclosure, the Sheriff conducts the foreclosure sale per the court orders. Colorado has one of the most complex and unique laws governing foreclosures.
A dream home at a bargain price can have priority mortgages, taxes, liens, judgments, processing/unspecified fees and other encumbrances attached. As with the couple in Florida – even people living in the home.
It’s always recommended that bidders investigate and do thorough research on a property before placing a bid and consult a real estate/foreclosure defense attorney first. Otherwise, a $16,000 bargain could turn out to be $300,000, a home you can’t move into and can’t afford.
Keith A. Gantenbein, Jr. is a Colorado foreclosure defense attorney located in Denver and servicing all of Colorado. He also handles bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, contracts and landlord/tenant. If you think you will be facing foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.