I think we are all thinking back a couple of years before the bubble.
A house in foreclosure today is going to be given to the first trust deed holder, while at the same time the second drops off. Nobody is going to bid. Now if the owner had any equity, the bank is going to market the unit lowering the price until it either sells, or the owners equity spread is zero. When it gets to zero, the bank, depending on how many units of inventory they have on hand might ask for bids to clear out the inventory.
Now a VA loan that forecloses will be returned by the bank to the VA. I’m not sure but I believe that the bank will get a full reimbursement. Somehow I seem to remember that the VA insures the first 20% of the banks loan against a loss. And on VA repo’s –high bid wins-if you can fog a mirror, this is a good one to jump on.
I can’t really be certain, but these people claiming to buying foreclosures, might be doing things a little more different than you think. The people they are talking to are desperate. I’ve read where for a fee, they would show the homeowner ways to stall the foreclosure and walk away with a couple of grand in their pocket. At this point,if it didn’t work out for the homeowner, he was now in even less of a position to take legal recourse.
