Your client might be entitled to money back after a foreclosure auction, if the house sells for more than the lender is owed.
Because of the demand for affordable residences in markets such as ours, where home prices are surging, some homes sold at foreclosure auctions are netting more than what the lender is owed. Once debts, liens, and fees are paid off, the homeowner who’d fallen behind in their mortgage payments is entitled to the remainder. But if a homeowner doesn’t know their rights, the money could go uncollected.
Denver County, Colo., officials say they have nearly $1.5 million in uncollected surpluses from the sale of about 50 foreclosed homes.
“In the past, people who lost their homes to auctions were typically underwater. [Now] prices have risen so that real estate investors, especially at auctions, are sometimes willing to pay more than what the [homeowner] lost it for,” says Brandon Turner, author of “The Book on Rental Property Investing.”
Portland, Ore., Denver, Seattle, and Miami are all places where home prices are rising fast, and struggling homeowners may find more windfall profits in foreclosure auctions.
“Denver is one of the hottest real estate markets in the nation right now,” says Mica Ward, spokeswoman for the public trustee of Denver County. “So when a home does have to sell at a foreclosure auction, we’re consistently seeing that the home is selling for more than what is owed.” She estimates that about 80 percent of foreclosure auctions in Denver County result in surpluses over the original debt. She returned up to $169,000 to one foreclosed homeowner this year following an auction.
Source: “Foreclosed On? You May Have Unclaimed Cash Waiting for You,” realtor.com® (Dec. 21, 2016)