Foreclosures Help Information

Foreclosed Bank Owned Properties

Question: Can a foreclosed home be sold/auctioned for more than the principle left on the delinquent mortgage?

I would like to know if the bank owned properties are being sold for a profit after foreclosure or are the banks only making their principle back.

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Answer: Technically, it is possible that someone has their home foreclosed on and then the bank sells it and gets more money than what is owed and that money could go back to the previous owner (the borrower who was foreclosed upon). Practically, it almost never happens that way.

Much more likely is that the bank sells it for a loss. Remember that there are many more costs for the bank involved in foreclosure than the principal that was owed at the time of the foreclosure.

It is much more likely, unless provisions of the mortgage prohibit making up the shortage, that the bank will not get enough in proceeds to cover what was owed and they may sue the borrower to make up that difference.

The short answer to your question is that the banks are not making profits on foreclosures. They make money on mortgages that are paid back as promised. In general and overall, foreclosures are a losing proposition and that is why they do so much damage to the financial institutions.

Buying A Bank Owned Property.

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