Realty411 Magazine Featuring Scott Meyers | Page 48
Generalities and Summary Meet Edward Brown
In general, keep in mind that a lower opening bid may
entice others to begin bidding and create a true auction. The
foreclosing lender is not prevented from bidding over and
above the opening bid. In fact, the foreclosing lender is
allowed to continue to credit bid up to the total amount it is
owed; it does not have to accept anything less. Additionally,
should the foreclosing lender desire to bid over what it is
owed, the foreclosing lender can come to the sale with
cashier's checks in the same fashion as the thirdparty bidders.
In summary, it appears that best practices dictate that the
only time the foreclosing lender should make a full credit bid
is when an IRS lien appears on title in a junior position. Even
then, the lender needs to investigate the value of the property,
the IRS lien, and the likelihood that the IRS would exercise its
right of redemption. Many times, the IRS will choose not to
exercise its right, and may possibly negotiate its claim, but
only a thorough and thoughtful analysis should come to the
correct conclusion as to the correct course of action.
Other than potential government liens against the property,
most foreclosing lenders would be prudent to start off credit
bidding less than the entirety of what is owed. Remember, the
credit bidder can always increase his bid....at least, up until the
time the trustee says, "Sold!" Again, please consult with
competent counsel prior to determining the correct amount to
underbid in order to preserve as many rights as possible. Edward Brown currently hosts two
radio shows, The Best of Investing
and Sports Econ 101. He is also in
the Investor Relations department
for Pacific Private Money, a private
real estate lending company.
Edward has published many articles
in various financial magazines as well as been an expert
on CNN, in addition to appearing as an expert witness
and consultant in cases involving investments and
analysis of financial statements and tax returns
Edward Brown, Host
The Best of Investing on KDOW AM1220
on Saturdays at noon
21 Pepper Way
San Rafael, CA 94901
4152990330
[email protected]
Meet Randy Newman
Randy is the president of Total Lender Solutions.
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