It was a bad day for several dozen homeowners in Jefferson County.  Today was foreclosure auction day.  On the steps of the Jefferson County Court House, homes were auctioned to the highest bidder.  In the afternoon session, about two dozen homes were on the auction block. 

How does a home reach this point?

1. Homeowner gets behind on the mortgage payments.
2. Mortgage Company gives notice of the delinquency to the homeowner.
3. A set period of time is given to cure the delinquency.
4. If the homeowner does not bring the payments current, then the mortgage holder will file a notice with the county court.
5. Twenty-one days after filing a notice of trustee sale a home can be auctioned.

Texas Foreclosure Laws are pretty straight forward.  There’s not a lot of wasted time between falling behind on payments and the court house steps.  Texas uses non-judicial foreclosures.  This avoids a lengthy lawsuit.  Most mortgages have a "power-of-sale" clause that allows the mortgage holder to sell the property for repayment if the borrower does not repay on time. 

Over 90% of the homes auction today were bought by the bank or entity that holds the mortgage.  Three homes were bought this afternoon by bidders.  The bank is trying to recoup what they are owed so a minimum bid- usually the mortgage amount- is set.  Anyone can make a bid over the minimum.  Its not for the faint-hearted.  You must pay CASH in full the same day. 

What’s the price range?

Today’s lowest minimum bid was $9000.  That one was bought.  The high bidder became the new owner for $9,100.  The most expensive property auctioned was in Barrington Heights.  The minimum bid was just over $280,000.  No takers on that one.  That’s a lot of cash! 

What happens to the homes no one bids on?

The banks or mortgage holders buy them for the minimum bid.  This is basically the amount they are owed. These homes are known are REO – Real Estate Owned.  After taking possession of these homes the banks hire local REALTORS to list the properties for sale. 

For most investors this is the safer time to buy a foreclosed home.  Here’s why:

• You have time to have a home inspection done.
• You can see the condition of the interior and exterior of the home.  You CAN’T do this prior to the auction because the homeowner is still living there.
• You have time to have a title search done.  This will help reveal any issues with title going into your name.
• You can finance the purchase price.

Want to learn more?

You can always attend the public foreclosure auction.  They are held the first Tuesday of every month.  Next bad day for homeowners in Jefferson County – April 1, 2008.