HOA Foreclosed and sold at auction to a bidder. Now Mtg must be satisfied to clear title?

My husband and I have been Realtors and investors for the past 8 years in Ocala and just move to Tampa last year. I have specialized in short sales for  most of the last 8 years, and was just approached by an investor to do a short sale with different circumstances.

Has anyone in the group had experience with the following:

Investor purchased property at a tax deed sale, or where an investor purchased a foreclosure  at auction and the Plaintif was the HOA?  

The catch is- These properties still have an active 1st mtg lien, so the lender must agree to release the property for less than what is owed to the new owner/investor.

I heard there was a way to approach the actual lender/investor instead of going through the servicer to get the mortgage negotiated and paid off.

Looking for advice on how to approach this so the new owner/investor has a clear title.


Thanks for any help,

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The only way I've seen of doing this is getting authorization from the borrower on the mortgage in order to talk to the lender. However, I'm not sure that will work in this case. 

Usually, if an investor buys at an hoa auction, they've somehow already found out what was owed on the mortgage and are going to try and sell the property and make money off of the equity. They don't try and do a short sale after the fact, the reason being that the lender won't usually allow a short sale once there's been a title transfer. 

In Florida, a tax deed sale wipes out the mortgage, assuming notifications were done properly. As for an HOA auction, usually the bank will not do a "short sale", actually a short pay off now that title has changed hands, without the involvement/cooperation of the mortgagor. Most investors at HOA auctions are buying for the short term rental income stream, since there is generally no equity. They usually try to delay the inevitable foreclosure, to prolong their rental income.

check w/a local attorney.

Will I get clear title to the property?
No, while the Tax Deed gives you ownership, it does not guarantee clear and marketable title.

To obtain marketable title, you may file for a "Quiet Title Action" in the civil court system. Anticipate a quiet title suit to cost anywhere from $800 to $1500 and to require the services of a qualified real estate attorney.

The suit generally takes about 60 to 90 days to complete. Upon completion, you will have clear title to the property. The purpose of the suit is to do just what it says - "quiet the title". All lienholders that have an interest in that property (i.e. mortgage holders, judgment holders, IRS, state liens) will be served and notified through the suit.

Typically, you would be responsible for all government municipal liens. (i.e. county, city, state, and federal). But, each case is different. Always consult with a real estate attorney for advice on liens that may or may not attach.


Kevin, agreed. In a tax deed sale, the buyer has to do the QT. But I was focusing on the difference between the HOA and Tax Deed auction, where the mortgage is not affected by the HOA auction in any way, as opposed to the Tax Deed auction.

Thank you for all the input! Very clear on the difference in tax deed sales with QT and an HOA foreclosure now. It appears the HOA foreclosure may not have a very good outcome for the new owner. 

If anyone has any other experiences with getting a 1st Mtg to agree to a short sale after title has transferred to a new owner through HOA foreclosure, please let me know.



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