What could be going on here? How complicated could this courthouse sale get?

[commentator]

What is the name of your state (only U.S. law)? Tennessee.

We just found out that a house up the street, a very nice house indeed, is going to be sold at a foreclosure auction on the courthouse steps this coming week.
There has been no attempt to sell the house, no notices posted anywhere, and the people who live there are still there, living their usualy high life style, buying new and very expensive lawn equipment this last week, making a pleasure trip with their grandchildren, giving no one any indication they might be moving out.

We'd love to own this house, are very serious about going to the sale and trying to bid on it, have the available $$ if it goes for a reasonable price.

But our question is, this guy made his living as some sort of financial planner. With this in mind, assuming he might have some competence in dealing with foreclosure issues, what exactly could be going on? We got word there could be an "IRS lien" on the house.

But what we want to know is, if we purchased this house, which seems to have been refinanced and double mortgaged a few years ago when the housing boom was in full swing, would we then have to go through the eviction process with these people? Is there any way anyone sees that they may be trying to let this house go into foreclosure without moving out, something they might try to keep it and get out from under their obligations? They certainly give no indications to their friends and neighbors about any intention to move.

 

[FlyingRon]

Yes, you'll have to evict them if they won't leave on their own (possibly with incentives from the new buyer).
Note however, that there is likely NOT to be a bargain here. The first is likely to bid enough to cover their interest.

As for the attitude of the current owners, I've seen it far too often. They figure there's no need to change their lifestyle to try to pay off their obligations, feel the foreclosure is inevitable and plan to just ride it out as long as possible (foreclosures aren't particularly too prompt these days and they may get to linger on in the REO for a while under any circumstance).

 

[commentator]

Well, that could cause us a nasty neighborhood feud, but surely they expected that someone will buy their house and evict them, didn't they? We could be ever so diplomatic, give them lots of time, since we already have a house we're in, in no hurry to move into theirs.

You're saying that the first mortgage holder will bid enough on the house to cover their investment, right? But then eventually, won't the first mortgage holder evict them and sell the house? A family member got a home recently where it had been in foreclosure two years before the people actually moved out.

I don't expect it to be a really low priced deal of a sale, have a figure beyond which we would not go in price, but I'm still surprised and baffled by the way these people are continuing to conspicuously consume, on their way back and forth to church, of course, being pillars of the community, while their property is literally being sold on the court house steps. Don't know if I'd want to mess with it, it'd take a really long time to put all their posessions out in the yard!

 

[FlyingRon]

You're saying that the first mortgage holder will bid enough on the house to cover their investment, right? But then eventually, won't the first mortgage holder evict them and sell the house.

Yes, the bank usually ends up owning it. The bank (or their agents) figure out if the property will market better empty or with well behaved tenants.

A family member got a home recently where it had been in foreclosure two years before the people actually moved out.

People's idea of when "foreclosure" commences and end is usually a bit nebulous.

I don't expect it to be a really low priced deal of a sale, have a figure beyond which we would not go in price, but I'm still surprised and baffled by the way these people are continuing to conspicuously consume, on their way back and forth to church, of course, being pillars of the community, while their property is literally being sold on the court house steps. Don't know if I'd want to mess with it, it'd take a really long time to put all their posessions out in the yard!

As I said, they've already made it up in their minds the house is a loss and they don't owe the bank anything and are just going to carry on until the world comes crashing down on them.
I don't agree with it, but it's a common mentality.

I have little compassion, due to a job move 20 years ago, I had to bring $30,000+ to a closing because I bought on a local bubble. It took me a while to recover, but recover I did and the loan was not ever delinquent, nor were things difficult for my eventual buyer. But I drove my old cars into the ground because I couldn't justify borrowing more money for a new one when I had junkers that were paid for.

 

[commentator]

This property is in a really desirable area. There are probably people who would pay a good bit for it. I suppose it will be up to the bank to do the eviction if they buy it, and then they will put it up for sale later. That might be a less painful way to get the property.

Watched a movie the other night where it was presented as the wisest thing the character could do, walk away from his mortgage. (He learned it in college!) But it's surely a surprise to us in the neighborhood that this particular couple is going to take that route.