A house was repossed and was an FHA Loan - why will the mortgage company bid at sheriffs sale?
Answer:
Financial institutions don't want property,they just want to get rid of it the quickest way and write off the loss before they are responsible for upkeep and taxes.
When the property is repossessed in the courtroom, they go out on the courthouse steps and bid it. The mortgage company sends a representative to bid up to the value of the mortgage (since this is the amount that will be returned to the mortgage company). At this point the representative will stop bidding and let any bids over this amount have it.
If there is a large mortgage on the property, courthouse auction will not yield a bargain. You will have to wait until it is put up on the market--usually at a reduced offering in order to 'dump' it. This is because the mortgage company will go back into court and sue the previous owner for a judgment of deficiency; i.e., the amount of money to make up the difference between the mortgage and what the property eventually sells for along with any and all fees.
william says it all
Mortgage holders are actually paid servicing fees to service loans for which the FHA is the investor. It is the responsibility of the lender to keep the loss of the investor at a minimum. The lender will bid approximately the amount that is owed on the property. If a third party bids higher its sold to them. If the mortgage holder wins the bid, they get the property into convey condition and then deed it back to HUD. The lender then files a claim with HUD for the costs. That is why FHA loans have to pay mip insurance.
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