Читать книгу Foreclosure Investing For Dummies - Ralph R. Roberts - Страница 65

Foreclosure investors often choose to do their bidding at auctions. A common misconception about foreclosure auctions is that investors bid on properties. The truth is that investors bid on mortgages (also called liens). What’s the difference? When you buy a property from homeowners, you own the property. When you buy a lien at a foreclosure sale, you may or may not eventually take possession of the property; if your area has a redemption period, the homeowners or someone else who has a legal claim to the property can redeem it. Check the appendix at the back of this book, and consult your county’s Register of Deeds office to find out more about the redemption period in your state.

For a better understanding of what you’re actually buying at a foreclosure auction, brush up on the following types of liens:

 Senior lien: The senior lien, or first mortgage, is the loan that the homeowners took out to purchase the property. I recommend that novice investors always buy first mortgages, because owning the senior lien gives you the best opportunity to take possession of the property eventually.

 Junior lien: The junior lien is any other loan the homeowners took out, using their home as collateral. A junior lien is usually a second mortgage, but it can be a home-equity loan, line of credit, or contractor financing provided for home improvements. Junior liens are often wiped off the books during the foreclosure process, so they can be very risky investments.

 Tax lien: A tax lien is a claim against the property for unpaid tax bills. Unlike junior liens, which foreclosure typically erases, a tax lien remains in place after foreclosure. If the tax lien is for overdue property taxes, the buyer must pay the taxes. If the lien is for income taxes, the Internal Revenue Service or other taxing agency may choose to forgive the taxes, but make sure that the foreclosing attorney notifies the IRS, as explained in Chapter 11. Buying a property tax lien is usually a safe investment, because if someone else purchases the property, you stand to get your money back and perhaps even earn a small profit. For more about profiting from tax liens, see Chapter 15.

Don’t bid at auctions until you fully understand the process and know what you’re buying. Whenever a foreclosure guru stages a foreclosure seminar in my area, my office begins receiving calls from angry novice investors who purchased junior liens, thinking that they were buying senior liens. One investor purchased more than $100,000 in junior liens only to find out later that those liens were useless pieces of paper. Chapter 11 shows you how to prepare for an auction so that you know what you’re bidding for before you place your bid.