Posted: 4/16/2026 7:36:14 AM EDT
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A distant in-law went through a foreclosure after her useless husband died. Her HOA foreclosed on her place and she walked with the balance after the HOA was settled. However.....there was also a mortgage on the property and the bank foreclosed on the new owners after the new owners took possession. The new owners ended up needing to get a new mortgage to cover the original mortgage so they did not end up getting the deal on the house that they thought they were getting. I know that you buyer beware at auctions because you need to check for liens and whatknot but how can you miss a whole mortgage on a property. How can the mortgage company still have standing when they were notified of the impending foreclosure and auction? And if this is legit, I have a follow-up question. Occurred in Florida btw. |
| It all comes down to lien priority. If the Bank had a prior superior lien, even with notice of the HOA proceeding, their lien was still valid and subject to foreclosure for non payment. If the buyer had title insurance when they purchased at the foreclosure sale (which seems unlikely given the circumstances described) they would have a claim under the policy if the title company missed the mortgage. |
"Freedom through Victory"
"Those who can ... do
Those who can't ... become site staff"
"Those who can ... do
Those who can't ... become site staff"
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Originally Posted By Bushman_269: It all comes down to lien priority. If the Bank had a prior superior lien, even with notice of the HOA proceeding, their lien was still valid and subject to foreclosure for non payment. If the buyer had title insurance when they purchased at the foreclosure sale (which seems unlikely given the circumstances described) they would have a claim under the policy if the title company missed the mortgage. @Bushman_269 Okay, so how about this scenario.. What is to stop someone who is in trouble from gaming the system? If you about to lose your home, take a home equity loan from a friend and make a few payments on the new loan before your foreclosure goes through. When the foreclosure happens and your house gets auctioned, you take the balance then you friend comes in and forecloses on the auctioned property. Friend either ends up with the house or proceeds from the new auction... |
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Originally Posted By urbanredneck: Okay, so how about this scenario.. What is to stop someone who is in trouble from gaming the system? If you about to lose your home, take a home equity loan from a friend and make a few payments on the new loan before your foreclosure goes through. When the foreclosure happens and your house gets auctioned, you take the balance then you friend comes in and forecloses on the auctioned property. Friend either ends up with the house or proceeds from the new auction... That scenario would not work as described because the home equity loan would be subordinate to the prior Bank mortgage. Even were the home equity lender to foreclose its lien the previous mortgage would have priority and could foreclose on their lien taking the property. If the bank lender were to foreclose first it could cut off the equity line lender by virtue of a superior lien. Additionally, both lenders would have the ability to bring an action upon the promissory notes signed by the borrower to obtain a judgment against him. Said judgment(s) could be enforced against any other property of the borrower. Good thought, thanks for playing says the bank. |
"Freedom through Victory"
"Those who can ... do
Those who can't ... become site staff"
"Those who can ... do
Those who can't ... become site staff"
| Homeowner who walked away with the balance after the HOA foreclosed but didn't pay the original lender off with the proceeds committed the misdeed. Buyers should have had title insurance, especially on such a sketchy purchase like a HOA foreclosure. They were greedy, fools, or both. Mortgage holder should have gone after the original [prior] owner first for satisfaction and then the buyers second but the HOA probably has liability also as they failed to disclose that there was a mortgage outstanding and likely held that info to force a quick sale and make themselves whole. If they used a realtor, they probably have some liability also. |
Liberals are a curious mix of communism and fascism, they want to destroy you but want to use your own money to do it.
I'm getting down to the last box, the others have all been destroyed...
I'm getting down to the last box, the others have all been destroyed...
| Always always always get the title insurance. It’s one of the least expensive insurance you can buy. It can help with the aforementioned issue and many others. Even if you get property from your great aunt Sue who has never done anything untoward anyone in life. Never know who might try to make a claim or when. |
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Originally Posted By fxntime: Homeowner who walked away with the balance after the HOA foreclosed but didn't pay the original lender off with the proceeds committed the misdeed. Buyers should have had title insurance, especially on such a sketchy purchase like a HOA foreclosure. They were greedy, fools, or both. Mortgage holder should have gone after the original [prior] owner first for satisfaction and then the buyers second but the HOA probably has liability also as they failed to disclose that there was a mortgage outstanding and likely held that info to force a quick sale and make themselves whole. If they used a realtor, they probably have some liability also. They didn't commit a misdeed, the HOA (and, more importantly, whatever court allowed the HOA/secondary leinholder to do it) did. I'd sue the shit out of the HOA for selling me a home it didn't own. And the mortgage holder should have sued them first. |
Exposure to views that distress and offend is a form of education unto itself. -U.S. Court of Appeals for the Ninth Circuit in Reges v Cauce
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Originally Posted By PepePewPew: They didn't commit a misdeed, the HOA (and, more importantly, whatever court allowed the HOA/secondary leinholder to do it) did. I'd sue the shit out of the HOA for selling me a home it didn't own. And the mortgage holder should have sued them first. As I stated above, the home was auctioned so there was not title search. Someone came cash in hand and bought without doing due diligence at a court ordered auction. I just don't understand the legalities, it would seem that country is taking possession and issuing title after lawful hearings. Seems that would negate bank's claim of title due to the existing mortgage as I'm sure they were aware of the impending auction. Why would banks bother stepping in on HOA foreclosures and paying off balances if they could just sit on the side line and nail the auction winner after the fact? |
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Originally Posted By urbanredneck: As I stated above, the home was auctioned so there was not title search. Someone came cash in hand and bought without doing due diligence at a court ordered auction. I just don't understand the legalities, it would seem that country is taking possession and issuing title after lawful hearings. Seems that would negate bank's claim of title due to the existing mortgage as I'm sure they were aware of the impending auction. Why would banks bother stepping in on HOA foreclosures and paying off balances if they could just sit on the side line and nail the auction winner after the fact? Originally Posted By urbanredneck: Originally Posted By PepePewPew: They didn't commit a misdeed, the HOA (and, more importantly, whatever court allowed the HOA/secondary leinholder to do it) did. I'd sue the shit out of the HOA for selling me a home it didn't own. And the mortgage holder should have sued them first. As I stated above, the home was auctioned so there was not title search. Someone came cash in hand and bought without doing due diligence at a court ordered auction. I just don't understand the legalities, it would seem that country is taking possession and issuing title after lawful hearings. Seems that would negate bank's claim of title due to the existing mortgage as I'm sure they were aware of the impending auction. Why would banks bother stepping in on HOA foreclosures and paying off balances if they could just sit on the side line and nail the auction winner after the fact? they buyer couldve and shouldve done a title search before bidding, that wouldve disclosed the bank lien (assuming it was properly recorded, which it almost always is) |
So this is what it looks like from inside looking out at the death of a republic.
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Originally Posted By JosephTurrisi: The problem is that the HOA shouldn't have been able to foreclosed on the house to begin with. Why? The owners hold the property subject to the CC&Rs and the HOA bylaws. When owners violate those terms and earn fines they don't pay, the HOA is entitled to recover. If you don't like HOAs/POAs, and there are many reasons not to, don't buy in an HOA/POA. A simple way to make sure an HOA never forecloses on your property. |
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Originally Posted By urbanredneck: I just don't understand the legalities, it would seem that country is taking possession and issuing title after lawful hearings. Seems that would negate bank's claim of title due to the existing mortgage as I'm sure they were aware of the impending auction. Why would banks bother stepping in on HOA foreclosures and paying off balances if they could just sit on the side line and nail the auction winner after the fact? It sounds like everything worked as intended. As was explained, it's all about the priority of the liens. When a lower-priority lienholder forecloses, it doesn't impact the claims of higher-priority lienholders. When a higher-priority lienholder forecloses, it can, if certain requirements are met, cancel the claims of lower-priority lienholders. When a county auctions off a property, it generally comes with something like a sheriff's deed, which means the buyer takes title subject to any superior liens or encumbrances, without any guarantee of a clear chain of title. Here, the HOA lien was almost certainly junior to the mortgage lien, so the foreclosure sale did not affect the mortgage lien, and the new buyers took the property subject to it. When it didn't get paid, the bank properly foreclosed. |