Sunday, March 23, 2008

Up in Smoke

I was just surfing the local trustee sales for my zip code and figured this looks a little wild. I copied 5 consecutive sales.
Double click for a more legible picture

Look on the right side of the table:
-------------------------------Notice of Sale Amt: $503,088.39
---------------------------------Opening Bid Amt: $370,000.00
-------------------------------------------Sold Amt: $370,000.00

The Opening Bid Amount and Sold Amount are the same. That means no one bid on the property. The bank got it. The difference between the Sale Amount and the Sold Amount (133K) are the secondary liens that have just dropped off the title.

Those 5 trustee sales had over a half a million dollars total, of secondary liens -- up in smoke, on the court house steps. This money was loaned by someone, somewhere. Now it's gone.

San Diego County holds a Trustee Auction and nobody shows up? It kind of makes you wonder about those second trust deeds. How many is Bernanke going to buy?


Malcolm said...

In this game of musical chairs, people are going to discover that once the music stops, there were never any chairs in the first place; and everyone is scr**wed.

Anonymous said...


Are you basically saying that the 1st lien holder (bank) intended to auction off at a price that covered both the 1st & 2nd lien holders - BUT that in the end, nobody showed up and they (bank/1st) simply paid an amount equal to their own 1st lien and in effect "shed" the 2nd holder from the books? Has the 2nd been permanently erased in this fashion (if I am understanding correctly)?

Anonymous said...

Does this kind of thing count as a sale? Would it explain the increase in home sales over the past month?

Jim in San Marcos said...

Hi Dan Mac

Trustee sales are fun to watch. I bid on a few back in 1998 and got out bid every time. The County clerk lists all loans on the Foreclosed property. It is the responsibility of the Junior loans to cure the deficiencies on the first TD in order to proceed to take posession in the trustee sale. If they don't cure the first, then they lose their right to take title and drop off when the first wins the bid. The second would not wait until the auction to cure the arrears on the first. It would be done weeks before that if they knew what they were doing. That's not necessarily the case though.

With the number included on the Trustee sale notice you can go down to the title company and look up the Preliminary on the title. This gives you the info of who is on the note before you bid.

Anonymous said...

Interesting. I am not sure if I have my facts correct but I believe it to be the case that here in MA the lien holders have to provide pay-off amounts before anything can be done. As a result, I think that "seconds" that felt they were going to be short changed were "losing" the paperwork in hopes of stopping the process or squeezing a little out of the first in a negotiation. In any event, they were preventing the process occurring and had little to lose by gumming up the cogs.

Thanks Jim ~

Dan Mac

Jim in San Marcos said...

Anon 10:35

I asked Data Quick if Trustee sales were included in total home sales.

Their answer was "We do not include foreclosures in our totals.

Did she answer my question? I am not sure.

At what point is a trustee sale house considered a foreclosure? Also at what point does a foreclosure lose it's foreclosed status?

How do you cull out the Trustee sales from the county recorders statistics?

Right now there are 4 houses with foreclosure signs in the window that do not show up on are not quite as they appear.

Jim in San Marcos said...

Dan Mac

MA may be different, I know in California, just before the sale, the First Trustee bid amount is calculated for a buy out on the day of the auction. The trustees beginning bid includes all fees, taxes and owed back payments. A bid of one dollar higher, and the bank lets you have the property. A bid over the banks costs relieves them of any fiduciary responsibility in regards to the loan.

The only reason the junior liens fall off, is that they don't cure the default on the first trust deed. Usually in that case, the house is worth less than the face amount of the first TD, so you kiss the second goodbye as a lost cause.

Anonymous said...

Thank you for posting this. I just went through this routine for the area immediately surrounding our home and misunderstood what I was seeing. I realized the home went back to the bank, but I assumed the sale amount was the actual market value of the home.

Jim in San Marcos said...

Hi Jeff

I saw two where the sales price was less than the bid price. Those had to be some interest only loans.

The bank gets to eat the whole loan and a bit more for being so nice.

Glad to be of help

Thanks for your comments

Strategic Investor said...

Great post!

Estimates are that there are about $53bn in 2nd liens made as part of liar loan packages, so those are almost certainly a goner.

Jim in San Marcos said...

Hi Strategic Investor

The trouble is, someone owns this stuff and has a real big loss. Just hope it is not me and you.