View Full Version : Selling property
Liza Santos
May 3, 2016, 10:52 AM
Do banks buy real estate properties?
smoothy
May 3, 2016, 11:05 AM
Where?
None I know of.
joypulv
May 3, 2016, 11:38 AM
Yes, they sometimes buy back ones they loaned money for and foreclosed on, if it goes to auction and the bids don't meet the loan amount.
It would be better if you told us your situation so you don't get scammed.
ma0641
May 3, 2016, 12:35 PM
No, banks don't BUY properties. They hold a Mortgage Lien on them until paid off. If the buyer defaults, they foreclose and SELL the property.
joypulv
May 3, 2016, 12:51 PM
Many auctions end with the bank buying their lien back.
They buy the house back at the foreclosed amount (the loan balance plus interest, late charges and legal fees). They do this is so that they can write off the foreclosed note as a bad debt, BUT they put the property back on their books as an asset for the amount that they paid at auction. This is a way that they can puff up their financials to look better than what they actually are.
Other times the bank will bid a much lower amount called an underbid. Some states have a redemption period. The homeowner is able to redeem their house for that amount if they can borrow the money or get another loan. Or, they are allowed to sell the house for the amount bid at auction. If they are able to sell it for more than the bank's bid, the homeowner is allowed to keep the extra money.
In the underbid situation, the bank may come after the homeowner in the future for a deficiency judgment, the difference between what they were paid and what they were owed.
Keep in mind that the lender almost always has sold the loan to Fannie/Freddie etc, so are really just collectors.
And they might want it so they can sell it when the market improves...
Yes it can get confusing.
AK lawyer
May 3, 2016, 01:01 PM
Many auctions end with the bank buying their lien back....
Yes it can get confusing.
Well, correct for the most part. But they don't buy their lien back. The mortgage lien (mortgage, to be precise) owned by the bank is extinguished when the property is sold. The bank gets a judgment of foreclosure instead of the lien. The bank often buys the property back by exchanging its judgment for the property.
Or, in non-judicial foreclosure states, the bank's beneficial interest in the deed of trust (similar to a mortgage) constitutes a credit with which the bank can make a bid at a foreclosure sale. If the bank is the highest bidder, it receives title to the property.
But yes, it can be confusing all right.
And, in additional answer to the original question:
Do banks buy real estate properties?
Not if they can help it. As noted, sometimes they have to in order to protect their security with respect to defaulting mortgages. But they are not in the business of buying property; they are in the business of loaning money to individuals and companies for the purpose of enabling those others to own real property.
ScottGem
May 3, 2016, 03:45 PM
A Bank is in the business of lending money. They take the money that is deposited by customers and lend it out so other customers can buy houses or other items. The idea is to lend it out at higher interest rates then they pay for deposits, thereby making a profit. However, some banks will invest the deposits in other investments to make a profit. Those investments could be in real estate, but it is rarer.
Fr_Chuck
May 4, 2016, 03:23 AM
I will only slightly disagree, a bank may invest money in large building complexes, shopping malls, large office complexes and more as part of a investment package they do.
They will not buy houses and small commercial properties,
They do end up owning them, if and when they foreclose on them.