Buying foreclosures? – Beware of what you buy – heed the story of Todd Phelps and Paul Whitehead – NY Times October 16, 2010
NY Times Financial Reporter Ron Lieber, on October 16, 2010 reported on the sad story of Todd and Paul: They purchased a Riverside, Calif. home at a foreclosure sale, only to learn that they had bid at the foreclosure of the second mortgage – and the house still remained subject to the lien/mortgage of the first mortgage company.
Todd and Paul paid $137,000 of their hard-earned cash – and faced not getting one penny back. (This story eventually has a happy ending – it appears the foreclosing bank from whom Todd and Paul purchased the property felt them to be such hayseeds that the bank relented and took the property back and returned the $137,000.
Mr. Lieber reports: "The auction process: Foreclosure auctions can be a dangerous place for people who don’t know what they’re doing or are relying on help from people who are sloppy or negligent. … Take your time. Assemble a panel of experts and apprentice yourself to them. And watch listings carefully. For better or for worse, foreclosed properties are going to be available for a very, very long time."
