What Happens at a Foreclosure Auction?

What Happens at a Foreclosure Auction?

Last week I went to a Lowell foreclosure auction at 72-74 West 3rd St, Lowell.  This property had been listed as a short sale, but didn’t get any offers in time to postpone the auction.

Since I work with buyers, it’s important for me to know how to advise my buyers when they are thinking of putting an offer in on a short sale, a foreclosed property, or at a foreclosure auction.  In the last 3 years I have attended approximately 10 foreclosure auctions and only one of them was bought by a person (instead of the bank buying back it’s property).

In my opinion buying a property at a foreclosure auction has the most risk possible for a buyer, especially now!  Why is that?  Read more…

  • Usually the buyer makes his/her bid without seeing the inside of the property.  (At the foreclosure auction the owner stills has possession of the property and the bank does not, so it legally doesn’t have the right to enter the property and therefore is unable to show potential buyers.)  Typical auction buyers would know ahead of time that the property’s auction is imminent and may go and knock on the door of the property to ask to see inside, but the condition might change between then and when the auction happens…
  • A buyer is only bidding on the property to purchase it from the bank who has initiated the foreclosure proceedings (usually the first mortgage holder).  Upon winning the auction, the buyer is then responsible for any and all the other liens that might be attached to the property, including any unpaid taxes, water bills, 2nd or 3rd mortgages or mechanic liens, etc.
  • The buyer now is responsible to any tenant in the building and any cost necessary to evict them if necessary
  • The buyer is allowed to have an inspection after winning the auction, but the bank is selling in the “as is” condition and the buyer will lose his/her deposit if they choose to walk away from the purchase
The foreclosure auction I attended lasted approximately 5 minutes.  It had been advertised in the paper previously by Harmon Law office, as is necessary, informing any and all debtors or buyers of the auction.  In attendance were the auctioneer, a representative from Harmon Law (for the Bank of New York Melon Trust), 2 registered bidders, a client of mine, and 3 other witnesses.  The auctioneer read information about the bank and the owners and also terms and conditions of the sale (warning to all potential buyers) and then the bank bought back the property for $224,900. Seven years and more ago bidders were more likely to purchase the properties because the owners had not been “upside down” (owing more money than the property was worth), but now 98% or more are bought back by the bank.
If you would like to know more information about the differences between a short sale and a bank owned property or tips on purchasing at a foreclosure auction, call or text Debbie Kruzel at 603-318-6953.

Dracut Short Sale Completed 2 Years Ago, Bank Still Calling Seller for Money

Dracut Short Sale Completed 2 Years Ago, Bank Still Calling Seller for Money

I sold a Dracut Short Sale home TWO YEARS AGO and on several occasions over the last 2 years the homeowner has called to tell me about the bank calling them for the money!  (Mind you, these sellers had just one loan and the bank agreed to forgive the difference that was not paid through the sale!)


The original bank was Washington Mutual (who was bought out by JPMorgan Chase) AND the property in question was sold via short sale to a rehabber who fixed it up and now ANOTHER OWNER is living there.  Even though the bank is disorganized with their paperwork, they should simply look in the County Records at the recorded deeds for Dracut, don’t you think?!

Hear more here about the Dracut Short Sale:


I have done many other short sales in the last several years and have not heard this kind of drama from my other short sale sellers, so you should consider this the “exception to the rule”… but I know of many many other odd things that happen with homeowners and banks these days.

If you are thinking of doing a short sale in Dracut or another MA or NH town, call or text me for more information at 603-318-6953.  Also, look through the information I have here, on my blog under “Avoid Foreclosure Information“.

Lowell Home Sold at 116 Quebec St

Lowell Home Sold at

116 Quebec St


List price:  $77,500

Sale price:  $78,000

Days on Market:  295

Single family attached home

# of bedrooms:  2

# of bathrooms:  1

Living area:  1140sf

Lot size:  .08 acres

I am so pleased to have this Lowell property sold for Amy and Jose and CONGRATULATIONS to Arthur on his purchase!  I have been working with Jose and Amy for over 3 years to sell this – we have had at least 6 buyers and worked with 3 different negotiators to help us with the short sale with Bank of America.  Our first big hurdle was in November 2008 when I called Bank of America several times to tell them that the property was vacant and needed to be winterized.  When did they do that???  FEBRUARY 2009!  (What are they, crazy?) We had an accepted offer that took 9 months for Bank of America to make a decision on and then when the buyer went to do their inspection in May 2010, there was water EVERYWHERE!

Then we had 2 more buyers who were turned down due to the low offers and finally our last offer was accepted.

If you have questions about buying or selling a short sale, I’ve completed MANY in the last 3 years and have lots of information here, on my blog.  If you want particular questions answered, call me (Debbie) right away at 603-318-6953


Do you have a story about Bank of America to share with others?  Post it below in the reply section or go the the Bank of America *&^%# Facebook Page.  People should know what they’re getting into when they have to wait for any short sale, particularly with Bank of America.

Another Short Sale SOLD in Big Lake MN – 55309

Another Short Sale SOLD in Big Lake MN  - 55309

I have been working with Susan G. at Keller Williams on this property for about 1.5 years.  Why do I tell you that?  Because you might want to know what to expect (as a buyer or a seller) during a short sale.

Beautiful home, Trulia says the 3 bedroom, 3 bath home sold for $223,000 back in August 2004 – this week it sold for $126,000.  This couple definitely qualified for a short sale and we started working the first buyer’s offer in November 2010.  There were 2 banks involved, both with Wells Fargo.  (You might think that would make it easier, but since the 2nd mortgage was with WF Home Equity, it might as well been with Chase or Bank of America or anyone else.)

I have done several short sales, and the beginning steps started out very predictably:

  • submit all paper work
  • the bank orders an appraisal (or BPO “broker’s price opinion” which costs about 25% of an appraisal)
  • bank counteroffers.

First problem: BPO came in at least $10,000 more than it should have, but the bank wouldn’t listen to what Susan said the value of the house was even though they required lots of documentation of other comparable homes.

Next problem: buyer didn’t want to accept the counteroffer of the bank, they waited weeks to respond and by that time the short sale file was closed and it took a lot of persuasion to re-open the file.

Next problem: once the buyer’s new offer went in, the BPO was “out dated” – the bank must do a new BPO every 90 days during the short sale process.  Also, the home owner must submit their updated bank statements and pay stubs about every 6-8 weeks as well.  (You can see how tedious this is already, right?)  Oh yeah – and since 2010 taxes were filed April 15th, we had to submit the new tax return as well!

Finally mid-May the banks started their “STAND OFF”.  The 1st mortgage holder said they would give their short sale approval after they saw the second’s and the second’s said they were waiting for the first.  (Luckily all the banks seem to have worked this “hitch out” by mid 2010.)  This stand off continued for approximately 5 weeks and required multiple requests for escalation of the short sale.

Finally, the second gave their short sale approval on July 13th (7.5 months after the first short sale documents were submitted) and we continued to wait, despite me calling almost every other day, until August 11th, when WF said the file was finally complete and ready to send off to the investor, Freddie Mac for approval – which is estimated to take 7-10 business days.  (Most of the banks we work with are simply “servicers” for the investors and must have final approval from the investor…)

Next problem: even though the government had extended the tax credit for people to Sept. 30th, home prices across the country were dropping rapidly and the buyer WALKED AWAY from the sale! The buyer’s agent said that they were able to find a property that was bigger for less money since the prices had dropped.  (As a Realtor, I totally understand this and his duty to look out for the best interest of the buyer – it was just really painful to have worked 8 months on the file.)

Now what?  Find a new buyer for the short sale.  The home was foreclosed on in December, but MN has a redemption period, so the pressure was on to get a new buyer AND an approval before early June!

The next short sale package was submitted to the banks in early Jan 2011 and the whole process began again.  This time, from the start, I submitted the details of how badly the short sale was handled the first time and was pleasantly pleased at how quickly the process went.  We still had to have another BPO done, of course, but this time it was much truer to the value of the home and the counter offer from the bank was more realistic for the market (and almost a full $25,000 less than the value in 2010!).

We got the short sale approval from the first in record time, the end of February and then had difficulties getting the paperwork tracked down (with respect to recordings) of the second mortgage and finally an approval from them as well.

This short sale worked out for the home owner and many do not.  Many homeowners and buyers get completely fed-up during the short sale negotiations and just give up.  If you are looking to buy or sell a home and you know a short sale is inevitable, the most important thing for you is to have a strong team of people who have completed short sales!  Great communication is imperative for all parties!

Please contact me with any questions about short sales.  I work with 2 great negotiators in MA now (that have successfully negotiate short sales in many states across the country).  Certainly many many short sales are working for people, but other short sales are still falling apart for one reason or another.  If you want your’s to be successful, contact me today at 603-318-6953 to get all the facts!



Loan Modification for WHO?

Loan Modification for WHO?

This week I called many people in Massachusetts who have gotten the “demand letter” from the bank which is one step before the “Service Member’s Civil Relief Act of 2003″  in MA which comes just before the official “notice to Foreclose”.  Confusing?  YEAH – and every state process is a little bit different!  I called because I know that people have questions and I have a LOT of answers, so maybe I can get a little extra information to them that they didn’t know so they can make the right decision for their family:  loan modification, short sale, foreclosure, bankruptcy…..????  WHICH ONE IS RIGHT???

First of all I got many disconnected phones and then every once in a while I got a live person.  I got all sorts of responses on the phone when I called, one guy said “What’s this about, if it’s about a short sale, I’m NOT DOING IT!  IF someone wants to offer me what my loan is for, I’ll consider it” WHAT? What kind of sense does that make if the loan is for $250,000 and the value of the house is $180,000?  (This guy was either in denial, really pissed off at his bank, mad that I called him, or something??)

A couple of people told me that they got they were working on a Loan Modification and 2 told me they GOT their loan modification.  To that last group of people I said “Make SURE you keep submitting all the paperwork that the bank wants and keep up with the payments because technically, at the

Calculator and money

beginning of the loan modification, a homeowner is essentially on a “probationary plan” to prove themselves before the final plan comes through and at any point the bank seems has been known to deny the loan modification!”

If this above information isn’t enough for a homeowner to proceed with caution, check out the video below that was first published back in February 2010 and see WHY the banks BENEFIT MORE from doing a short sale or a foreclosure rather than doing a loan modification.  (Beware, if you are at all like me, you’re about to be really pissed off where your tax dollars have been going!)


Now, if you have questions about your situation as to whether a loan modification or short sale is right for you, CALL ME at 603-318-6953 or e-mail me right now at DKruzel at KW.com

Please seek legal advice.  This information is for informational purposes only.

How’s that HAMP Loan Modification Program working out for you?

How’s that HAMP Loan Modification Program working out for you? - reposted with permission from Katerina Gasset

from Wellington, Florida

Here is the utter stupidity, disconnect and total disregard for the homeowner in the HAMP program- HAMP loan modification program is a bust

If you live or own a home in Florida- not so good I would say. While there are the very few that get their loan modifications approved most do not. The numbers just don’t work.
We just listed a very nice home as a short sale. This was not a happy day for our seller. He wants to keep his home but no longer can because of the total – I don’t even know the word to call it- of the servicer- the bank where he pays his mortgage payment to.
His payments were $2600 per month. Due to this economy and the resulting loss of income in his business he could no longer afford the payments of $2600. So he asked to have his payments reduced through the HAMP loan modification program.
That was 9 months ago.
So the bank tells him that they are processing his loan modification and approves him for a trial modification with payments of $1700 per month. He makes every one of those payments. He is on time with every one of those payments.
Now, they come back, 9 months later and tell him his loan modification has been declined.
He wants to know why, well, because he does not have enough income to qualify. Well, he wonders, why is that when he just proved for 9 months that he can make the payments and did make the payments and was never late in any of those payments.
Because of red tape, bureaucracy, total disregard for circumstances, total oblivious to reality and utter ignorance with the most stupid determination to only follow guidelines that have nothing to do with reality. The saddest part is that I can tell you whether you will be approved based on your financials in ten minutes or less! How come it takes 9 months for a bank who is in the business of numbers to tell you that you don’t qualify based on your income! It’s not rocket science to take a calculator, add up your expenses then subtract that from your income.
But that is not even the kicker in all of this!
Guess what happens next!
They give him the big news! He is NOW IN DEFAULT! How’s that for a thank you for applying for our great HAMP program, and oh, by the way, not only are you NOT approved you now owe us ALL the money- Your whole loan is NOW due! WOW!
He wanted to keep his house so he took the steps he was told to take only to get the short end of the stick at the end of the day.
Nearly in tears he now has to sell his house as a short sale in order to avoid the foreclosure stain on his self, credit, etc. This did not have to happen. He is a casualty of doing the right thing.
by Katerina Gasset

If you need information regarding your situation, please call Debbie at 603-318-6953 for a confidential phone interview regarding your options.
Please seek legal advice.  This information is for informational purposes only.

Why Do Banks Want to do Short Sales?

Mortgage lenders continue to be very willing to do a short sale by working with borrowers faced with a financial hardship and are heading towards foreclosure.  If  you are faced with a hardship and are unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through the foreclosure process.

Although infrequent, a lender may accept a short sale when the loan is still currently being paid and the homeowner shows that they will not be able to pay in the immediate future. I, personally, have found that all my short sales were only reviewed by the banks when the mortgages were in default (late or missed payments).

As a homeowner considers the option of pursuing a short sale, they need to remember that the lender is looking to limit the potential losses on the loan. By completing a short sale, the lender has arrived at a solution that is, for them, much better than a foreclosure. Different sources quote that when a lender forecloses on a property, they can lose from $20,000-$50,000 + by the time the property is finally owned by a new homeowner. These costs are accrued due to: legal fees, missed payments, taxes and insurance, property maintenance, including exterior and interior (often times winterizing the property), and then the listing and selling of the property through a real estate agent.

Why else would a mortgage company agree to accept a short sale? There are actually several reasons why, including:

  • Legal Concerns: Mortgage lenders continue to be under legal pressure to work with borrowers to equitably resolve situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an effort to arrive at a compromise solution.
  • Wall Street continues watching mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the lender’s ability to sell their loans on the secondary market. A successful short sale gets the loan pay off resolved quickly.
  • Reserve Requirement: Delinquent and non-performing loans place another burden on mortgage lenders. For all delinquent and non-performing loans, lender must set aside funds in reserve to deal with potential losses. These funds cannot be put to work generating new loan fees until the bad loans are resolved. A successful short sale lets the lender put more money to work.

With all this information in mind, I think you’d agree that doing a short sale is a good opportunity for people who are faced with a possible foreclosure because they are unable to pay their mortgage.

If you (or someone you know) needs help with a short sale or answers to difficult questions, including information you read here, please direct them to this information and certainly to my “Avoid Foreclosure Information for Homeowners” series of videos”.

Short Sale Frequently Asked Questions – Part 4 of my series on short sales

Thank you for coming to the last part of this series on short sales and avoiding foreclosure. The series is best viewed in order, so if you haven’t watched the other 3, click here: Part 1, Part 2, Part 3.

In the video portion of my post I will cover several of the most frequently asked questions. If I covered all the questions, the video would be just too long, so below I will also introduce additional questions for you to consider.

Questions answered in the video:

1. What is a short sale?
2. If the bank foreclosed on my property, would I still owe money to the bank?
3. When I have a short sale done, will the bank come after me for the deficiency?

Promised link to help you understand why the homeowner doesn’t have to pay tax on the “waived deficiency”: The Mortgage Forgiveness Debt Relief Act and Debt Cancellation (like I said in the video, this is pretty complicated ~ especially when you’re trying to understand it from a GOVERNMENT website, so I usually talk a lot to people individually about this.)
Later, in 2010 the initial Act was extended.
This final link has a great answer for how people follow up with their taxes the year after they sell their house.

4. What about my credit?
5. Does everybody get a short sale approved?
6. Can I guarantee you that your short sale will be approved?

New questions:

1. What if I have 2 or 3 liens on the property, can I still do a short sale?
2. What if my property needs a lot of repairs?
3. I don’t have money to pay the back taxes and Realtor commissions, how can I sell?
4. What will I have to pay to sell my property?

Final question: “How can I trust you?”
I have been a teacher since 1990 and I believe the most important thing for people is knowledge. Call my Keller Williams Realty office in Andover at 978-475-2111 or Dracut at 978-454-4440 and ask who their short sale specialist is or go to my YouTube Channel and look at the testimonials that people have done for me. I have completed many short sales an I am committed to working with you the full 3-6-9 months it takes to complete a short sale. In addition, I communicate with all the interested parties on a regular basis.

Ready to get started? Call me at 603-318-6953 or e-mail me at Dkrzuel@kw.com today, you’ll feel a huge sense of relief in taking some action.

If you’d like to have a copy of the FAQs – fill out the contact form and I will send them to you!

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Short Sale Interview with homeowner – Part 3 of a 4 part series on short sales

Thank you for coming to this 3rd part of my 4 part series on short sales. The series is best viewed in order, so if you have not watched part 1, link to it here: Part 1, and then view Part 2 here.

This 3rd video is an interview with Greg, who sold his home in Haverhill MA, last September upon completion of the short sale negotiations with 2 mortgage companies.

The quality of this video is not quite as good as the others, I apologize. I do hope you were able to overlook that and really hear what Greg experienced and the advice he offers to other homeowners possibly facing foreclosure.

#1 Greg said that he was out of work with medical problems, and as a single person, was unable to keep up with his mortgage.

#2 Greg says he is really enjoying everything about his life more and feels much less stress. (Now that we completed his short sale.)

#3 Greg’s advice to other homeowners is:
a) try to plan ahead for problems that come up in life
b) don’t wait until the last minute to get “that far behind”
c) “do what you’ve got to do to get that stuff off your shoulders”
d) “don’t wait until you’re so far behind that you’re so stressed out”

There is one more video to view in my series on short sales, regarding frequently asked questions and you can link here for Part 4.

If you have immediate questions regarding your situation, call me at 603-318-6953 or e-mail me at Dkruzel@kw.com. Alternately you may fill out the information below and we can talk asap.

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Can you qualify for a loan modification or short sale? Part 2 of a 4 part series on short sales

Welcome back to part 2!

Here you will learn if you can qualify for a loan modification or short sale to avoid foreclosure. This is the 2nd part of the 4 part series, best watched in order. If you have not watched part 1, link to it here: Part 1 of 4.

Thousands of people across the country have had Short Sale completed to avoid foreclosure and you may be able to too! In the video below you will learn about many of the situations that people have been in that have encouraged the banks to work with them.

Personally, most of the people I have worked with in the last 2 years have had a job loss or a personal relationship that has become a separation or divorce. (Think about it – the divorce rate is over 50% today and money is a challenging part for almost all relationships!)

As you saw in the above video, there’s a lot of paperwork needed to present to the bank. In order to begin the short sale, that paperwork and an offer to purchase your property need to be submitted together. Once that happens the following things happen within the bank:

1. A negotiator is assigned
2. The bank orders someone to view the property to put a value on the property
3. The negotiator compares the value to the offer and perhaps asked the buyer to pay more money before issuing an approval
4. An approval is issued with a closing date 30-45 days out
5. The property is sold

Simple, right? Well…. as my friend, Amy, once asked, why does it take so long if it’s called a short sale? (Because the banks take “short money” on what is owed!) Short sales have taken as little as 30 days, but on average, take 4-6 months, and in many cases can take up to 8 or 9 months! (The longer times are usually due to a 2nd or 3rd buyer who comes in after the 1st can’t wait any longer.)

Tenacity, persistence, and great communication skills are required to complete a short sale. I have worked many short sales and work closely with the other agent and negotiators so that everyone knows where we are in the process and what is left. Although neither I nor anyone else can guarantee the short sale will be successful….DON’T LEAVE THIS TO CHANCE on your home!

Be proactive and do a loan modification or start a short sale in MA or NH today to avoid foreclosure if that’s the best plan for you and your family! You’ll feel a lot better once you start moving forward with a plan!

Call me TODAY so we can discuss your situation and get a buyer right away! My phone is 603-318-6953 or e-mail me now at Dkruzel@kw.com. Alternatively, fill out your information below and I will contact you asap.

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