Buying DVC Foreclosures? Current Listings going to auction in March 2019

[mustinjourney]

No any junior mortgages are not extinguished in a foreclosure auction (only those items listed on the judgement are guaranteed to be extinguished). However if there is a profit on the foreclosure (above the judgement) that does go to the junior liens however anything above that is still attached to the property title. My original point was more Disney could foreclose on MF but someone had a third party mortgage that didn’t foreclose on the property but would need to be satisfied. So that would be a potential issue.

Also yes taxes on the WDW resorts are paid through the MF so that would be apart of the MF owed.

Unless timeshares fall under some weird law I'm unaware of, junior liens should be extinguished against the property.

"Following a first mortgage foreclosure, all junior liens—including a second mortgage and any junior judgment liens—are extinguished and the liens are removed from the property title. However, the second mortgage debt and creditor’s judgment remain, even though they are no longer attached to the foreclosed property. While the security for the debt has been eliminated, the obligations remain in place."

https://www.nolo.com/legal-encyclopedia/what-happens-liens-second-mortgages-foreclosure.html

where you'd have to worry is in the case where there might be a secondary lien that is being foreclosed on a DVC property and the primary one is still there. With that said, I'm not even sure if this is possible. Can you get a line of credit based on a timeshare? If not -- I can't think of how there could even be a junior mortgage on a timeshare.

 

[crvetter]

Unless timeshares fall under some weird law I'm unaware of, junior liens should be extinguished against the property.

"Following a first mortgage foreclosure, all junior liens—including a second mortgage and any junior judgment liens—are extinguished and the liens are removed from the property title. However, the second mortgage debt and creditor’s judgment remain, even though they are no longer attached to the foreclosed property. While the security for the debt has been eliminated, the obligations remain in place."

https://www.nolo.com/legal-encyclopedia/what-happens-liens-second-mortgages-foreclosure.html

where you'd have to worry is in the case where there might be a secondary lien that is being foreclosed on a DVC property and the primary one is still there. With that said, I'm not even sure if this is possible. Can you get a line of credit based on a timeshare? If not -- I can't think of how there could even be a junior mortgage on a timeshare.

I corrected my mistake in a following post. But thanks for the follow up. Though it does matter what mortgage you are bidding on in foreclosure if I’m not mistaken. It’s just best to be very careful when bidding and making sure you know which lien it is for (senior, junior, MF). I would even suggest talking to a lawyer in Florida since foreclosure laws are different state to state.

Just to be clear Orange County states that all liens do not fall off which is likely they mean when the primary mortgage isn’t forcing the foreclosure. See their FAQ: https://myorangeclerk.realforeclose.com/index.cfm?zaction=HOME&zmethod=START#EraseLien That led to my initial confusion. Plus it is evident that all don’t since MF aren’t satisfied which are lienable during a foreclosure process.

 

[miTnosnhoJ]

Does anyone know what “rights” a foreclosure buyer would gain? Is it considered a resale, with no ability to get APs and no ability to book at Riviera, for example?

 

[Alan Goldschmidt]

@miTnosnhoJ

I would think that the transfer would be considered a sale so the purchaser would be subject to all restrictions at the time of sale.

@crvetter

The relevant section from the County Clerk's website states: "Does the foreclosure or tax deed sale erase all other liens on the property? There may still be other encumbrances (judgments, priority mortgages, taxes, or liens) that survive the sale." It's not clearly stated, but I would imagine that that is referring to other encumbrances which are superior to the foreclosed encumbrance. But if the foreclosed encumbrance is a first mortgage, then nothing would be superior (assuming that title was clear when the mortgage was placed, but that is almost certainly the case since the mortgage is created at purchase and I imagine that Disney wouldn't give a mortgage without clearing title first).

An interesting question is the MFs. I would think that any lien for MFs would be junior to the first mortgage, so they would also be extinguished. However, even if the lien is extinguished, can Disney still force you to pay owing MFs before issuing new points? Is it still a valid debt at that point?

 

[crvetter]

Be interesting. As far as I know from others that purchased Disney does require all HOA fees paid (plus late fees) on a foreclosed property.

https://www.orlandosentinel.com/bus...vacation-club-foreclosure-20151224-story.html

 

[Alan Goldschmidt]

And this is a basic question, but is the winner responsible only for the winning bid, or also to satisfy the outstanding final judgment?

 

[crvetter]

And this is a basic question, but is the winner responsible only for the winning bid, or also to satisfy the outstanding final judgment?

The winning bid plus a few other tax costs for the auction component, I'm fairly certain. I believe this is why the owner of the lien bids on the property too, in order to make sure it doesn't go less than the judgement.

 

[kniquy]

And this is a basic question, but is the winner responsible only for the winning bid, or also to satisfy the outstanding final judgment?

Below is a link to a thread on this board from last year. Someone who actually purchased posted some info on what was owed. Look at # 34 and 42.

https://www.disboards.com/threads/buying-foreclosure-what-does-2672-of-unit-107b-mean.3684302/page-2

 

[Alan Goldschmidt]

The winning bid plus a few other tax costs for the auction component, I'm fairly certain. I believe this is why the owner of the lien bids on the property too, in order to make sure it doesn't go less than the judgement.

So then why does the Clerk's office even mention what the final judgment is? Does it make a difference to the winner in any way? And I don't understand your second point. Of course the lien holder wants to proceeds of the sale to be high enough to cover their judgment, but how does it help if they are the winning bidder? Then the money is just going from one pocket to the other, no?

 

[crvetter]

So then why does the Clerk's office even mention what the final judgment is? Does it make a difference to the winner in any way? And I don't understand your second point. Of course the lien holder wants to proceeds of the sale to be high enough to cover their judgment, but how does it help if they are the winning bidder? Then the money is just going from one pocket to the other, no?

I think they then re-auction/sell if off on their own once they own it (such as the many bank owned condos/homes post 2008 that sat for many years because the banks wanted to be made whole). The banks/lien-holder can't take position of the property except for voluntary surrender or a foreclosure auction. In the case of DVC they buy the points at roughly a max of resale prices then make the HOA dues whole then resell them direct for some small profit. This also guarantees that the resale prices of DVC don't bottom out.

Essentially I assume the lien-holder bids because they feel the market value is above what it will auction for. So they buy it to be made whole (if going less than the judgement) or to make more money. As the person being foreclosed on only gets the excess proceeds of the foreclosure auction not the re-sale that the bank may then do after owning the property. Essentially I view it as a way to protect what is owed or even double dip in a sense.

 

[Alan Goldschmidt]

Case Number: 2018-CA-006824-O (ct V) just closed today at $20,100.00 for 100 points, and that's purchasing blind without knowing the MF owing or the number of points available. I don't know what it going on, but it is impossible for anyone to get any benefit by purchasing these points at $201/pp minimum. There must be something that we are missing.

 

[snoope]

Waste of time. I tried this last year. Not going to get into details but Disney always drives up the bid price until its market value. Practically impossible to sneak one by them. They also started doing the auctions in a third party lawyers office. Disney has a lawyer right next door that attends every auction.

 

[crvetter]

Case Number: 2018-CA-006824-O (ct V) just closed today at $20,100.00 for 100 points, and that's purchasing blind without knowing the MF owing or the number of points available. I don't know what it going on, but it is impossible for anyone to get any benefit by purchasing these points at $201/pp minimum. There must be something that we are missing.

It actually was for 243 points so they got it for ~83 a point. But considering it was Animal Kingdom that runs around 100-110 loaded resale I don't think its worth it because if they owed 1-3 years back MF then the savings are immediately gone. Also I assume Disney bid it up to 19,800 based on the auto bids which I assume to by Disney (I don't think they have time for someone to sit there when the decision on the max they will pay is probably set months in advance).

I do think the person that bid on this contract and won I've seen their name before come up as a winner. So they might be flipping/renting them...

Also back in January I saw someone bid on 2 - 25 points and 1 - 50 point for Boardwalk and ended up paying 125 per point on average. They also were foreclosed for 2016 MF so I think it was safe to assume they needed to pay 2017, 2018, and 2019 MF, while only receiving 2018's points forward.

 

[crvetter]

It actually was for 243 points so they got it for ~83 a point. But considering it was Animal Kingdom that runs around 100-110 loaded resale I don't think its worth it because if they owed 1-3 years back MF then the savings are immediately gone. Also I assume Disney bid it up to 19,800 based on the auto bids which I assume to by Disney (I don't think they have time for someone to sit there when the decision on the max they will pay is probably set months in advance).

I do think the person that bid on this contract and won I've seen their name before come up as a winner. So they might be flipping/renting them...

Also back in January I saw someone bid on 2 - 25 points and 1 - 50 point for Boardwalk and ended up paying 125 per point on average. They also were foreclosed for 2016 MF so I think it was safe to assume they needed to pay 2017, 2018, and 2019 MF, while only receiving 2018's points forward.

Also Disney won all but 3 contracts being bid on. Of the 3 they lost 2 were won by the same people (the people that won the auction you referenced). The other auction they won they paid $86 a point for SSR, which is only max a $10 a point savings over resale (ignoring potential MF that need to be paid).

 

[Alan Goldschmidt]

It actually was for 243 points so they got it for ~83 a point. But considering it was Animal Kingdom that runs around 100-110 loaded resale I don't think its worth it because if they owed 1-3 years back MF then the savings are immediately gone. Also I assume Disney bid it up to 19,800 based on the auto bids which I assume to by Disney (I don't think they have time for someone to sit there when the decision on the max they will pay is probably set months in advance).

I do think the person that bid on this contract and won I've seen their name before come up as a winner. So they might be flipping/renting them...

Also back in January I saw someone bid on 2 - 25 points and 1 - 50 point for Boardwalk and ended up paying 125 per point on average. They also were foreclosed for 2016 MF so I think it was safe to assume they needed to pay 2017, 2018, and 2019 MF, while only receiving 2018's points forward.

You are right. I was looking at the wrong deed. The actual amount here is 243 points, so the bidding actually closed at $83/pp. However, the mortgage was assigned to Palm Financial in 2017, so I would assume that MF are owed for at least two years, and at approximately $8/pp, that totals $3,888, bringing the total acquisition costs to $23,988 (ignoring closing costs). At that price, you are paying $99/pp, which is just under market. I guess it's still a savings, but for the casual buyer, it's not worth the headache. Also, as someone said earlier, Disney has the benefit of having the information regarding MFs owed, whereas we are just guessing.

 

[jrbenji]

If MF are a reason to put a Lien on the properity but are not the primary reason it went to foreclosure then wouldn’t Disney have to put a claim in for Money paid above the judgment awarded after auction

So let’s say the judgment
passed by the court to satisfy the primary lienholder is 5000
So at auction it sold for 10000
i printed out a final judgment document and
paragraph 11 says amping other things

that if you are a subordinate lienholder claiming a right to funds remaining after sale u have 60 days to put in a claim

Wouldt that satisfy any MF disney is looking to recoup by making a claim for the extra 5000 above the judgment

Unless I am confusing the term subordinate lienholder with a secondary lienholder

And are 2 diffeent things

 

[Alan Goldschmidt]

If MF are a reason to put a Lien on the properity but are not the primary reason it went to foreclosure then wouldn’t Disney have to put a claim in for Money paid above the judgment awarded after auction

So let’s say the judgment
passed by the court to satisfy the primary lienholder is 5000
So at auction it sold for 10000
i printed out a final judgment document and
paragraph 11 says amping other things

that if you are a subordinate lienholder claiming a right to funds remaining after sale u have 60 days to put in a claim

Wouldt that satisfy any MF disney is looking to recoup by making a claim for the extra 5000 above the judgment

Unless I am confusing the term subordinate lienholder with a secondary lienholder

And are 2 diffeent things

I'm not sure what you are asking, but I think that if someone stops paying their MF, they will also stop paying their mortgage, so it's very unlikely that a foreclosure would occur on the MF instead of the mortgage. If that scenario were to occur, then, as I understand the law, the proceeds are used to pay the senior lienholder first. Therefore, foreclosing on a junior lien only makes sense in the event that the junior lien-holder is confident that the proceeds from the foreclosure auction will be large enough to cover not only its own lien, but also any senior liens.

A couple of unrelated observations now that I've had some time to understand the process here:

1. It seems very unfair to the debtor that some properties close above the judgment amount (and in such event the debtors are entitled to the "extra" money), while some close at $100 and therefore the debtor walks away with nothing. Sure, you can say that the debtor is always at the mercy of the foreclosure auction results, but in this case, it's not a true action because many potential bidders are discouraged from participating by knowing that Disney has perfect information and is always there to bid the "right" amount.

2. I initially asked what reason there would be to bid on a foreclosure instead of purchasing through the resale market since there seems to be no substantial decrease in price for doing so. I think the answer is expediency since the entire process lasts a couple of months instead of half a year or some (and the bypass of Disney's ROFR), and,even factoring in the outstanding MFs, they are unlikely to pay a materially higher price than in resale. Most likely, most of these bidders are renting the points, and the demand/profit is so great that it's beneficial for them to pay a little more and receive points sooner. Also, once in a while they are likely to get a good deal which can average-out some bad deals.

3. If the foreclosure is on a first mortgage, then I think it's safe to assume that there are no other surviving liens. However, the outstanding MFs still exist, and those can be guesstimated by searching the Comptroller's website to see during which year did DVD Financing assign the Mortgage to Palm Financial. To be safe, I would assume that MFs are owing commencing on that year.

If anyone sees things differently, please let me know!

 

[crvetter]

If MF are a reason to put a Lien on the properity but are not the primary reason it went to foreclosure then wouldn’t Disney have to put a claim in for Money paid above the judgment awarded after auction

So let’s say the judgment
passed by the court to satisfy the primary lienholder is 5000
So at auction it sold for 10000
i printed out a final judgment document and
paragraph 11 says amping other things

that if you are a subordinate lienholder claiming a right to funds remaining after sale u have 60 days to put in a claim

Wouldt that satisfy any MF disney is looking to recoup by making a claim for the extra 5000 above the judgment

Unless I am confusing the term subordinate lienholder with a secondary lienholder

And are 2 diffeent things

I'm not sure what you are asking, but I think that if someone stops paying their MF, they will also stop paying their mortgage, so it's very unlikely that a foreclosure would occur on the MF instead of the mortgage. If that scenario were to occur, then, as I understand the law, the proceeds are used to pay the senior lienholder first. Therefore, foreclosing on a junior lien only makes sense in the event that the junior lien-holder is confident that the proceeds from the foreclosure auction will be large enough to cover not only its own lien, but also any senior liens.

A couple of unrelated observations now that I've had some time to understand the process here:

1. It seems very unfair to the debtor that some properties close above the judgment amount (and in such event the debtors are entitled to the "extra" money), while some close at $100 and therefore the debtor walks away with nothing. Sure, you can say that the debtor is always at the mercy of the foreclosure auction results, but in this case, it's not a true action because many potential bidders are discouraged from participating by knowing that Disney has perfect information and is always there to bid the "right" amount.

2. I initially asked what reason there would be to bid on a foreclosure instead of purchasing through the resale market since there seems to be no substantial decrease in price for doing so. I think the answer is expediency since the entire process lasts a couple of months instead of half a year or some (and the bypass of Disney's ROFR), and,even factoring in the outstanding MFs, they are unlikely to pay a materially higher price than in resale. Most likely, most of these bidders are renting the points, and the demand/profit is so great that it's beneficial for them to pay a little more and receive points sooner. Also, once in a while they are likely to get a good deal which can average-out some bad deals.

3. If the foreclosure is on a first mortgage, then I think it's safe to assume that there are no other surviving liens. However, the outstanding MFs still exist, and those can be guesstimated by searching the Comptroller's website to see during which year did DVD Financing assign the Mortgage to Palm Financial. To be safe, I would assume that MFs are owing commencing on that year.

If anyone sees things differently, please let me know!

I think this answers the question MFs (HOA dues) are treated differently in Florida, which is why Disney collects them from the buyer of the foreclosure. I had a feeling this might be the case that HOA dues were always attached to the property and can't be separated from the property. I think this is basically saying HOA dues are treated very similarly how Tax Liens are treated in many states. A tax lien, depending on the state, isn't always satisfied by the foreclosure sale, and sometimes the buyer needs to make the payment to get clear title.

https://www.floridarealestatelawyer...iens-buying-foreclosure-miami-broward-county/

 

[jrbenji]

I found a judgment, that from what I can tell was foreclosed on what’s listed as delinquent assessments
Of 653.07$.

(Plus the rest of the typical fees associated with the judgment)

So I was thinking this is the maintenance dues owed on that property

for what ever reason they didn’t want to pay or couldn’t

It’s a Saratoga springs contact and by looking through past doucuments on the Orange County Comptroller’s site
from putting everything together
I figure that is what the cost was on Dues owed in 2016
120 pts x 5.44 a point 652.8


So that’s why I was thinking that any money over the judgment would go to Disney to pay for any other outstanding MF on the contract

not including the current use year fees once you become the new owner

But it looks like that’s not the case and Disney basically is allowed to double dip

The palm finacal plaintiff has to be associated with Disney so when you pay over the final judgment they keep all money
(they being Disney)
paid above with out having to file through the courts to get a share of the extra money to cover the lost dues

then get to charge the new owner for back dues owed

I have only been reserching into this a few weeks and trying to see if this is a good way to buy dvc
And it looks like I have a lot more to learn

 

[crvetter]

I found a judgment, that from what I can tell was foreclosed on what’s listed as delinquent assessments
Of 653.07$.

(Plus the rest of the typical fees associated with the judgment)

So I was thinking this is the maintenance dues owed on that property

for what ever reason they didn’t want to pay or couldn’t

It’s a Saratoga springs contact and by looking through past doucuments on the Orange County Comptroller’s site
from putting everything together
I figure that is what the cost was on Dues owed in 2016
120 pts x 5.44 a point 652.8


So that’s why I was thinking that any money over the judgment would go to Disney to pay for any other outstanding MF on the contract

not including the current use year fees once you become the new owner

But it looks like that’s not the case and Disney basically is allowed to double dip

The palm finacal plaintiff has to be associated with Disney so when you pay over the final judgment they keep all money
(they being Disney)
paid above with out having to file through the courts to get a share of the extra money to cover the lost dues

then get to charge the new owner for back dues owed

I have only been reserching into this a few weeks and trying to see if this is a good way to buy dvc
And it looks like I got a lot more to learn

Since the subsequent years are not liened yet (attached to the title) I’m guessing the amount that the property is sold for above the judgement goes to the original owner. Disney than collects the remaining MF from the new buyer. If they update with new liens for later years I suspect it delays the foreclosure process. Plus not claiming all the MF is beneficial for Disney (and DVC owners) because in the event it sells less than the judgement the association doesn’t take a big hit on the missed MF. I suspect doing it where they don’t lien all of the dues is beneficial to Disney also because it makes foreclosure less desirable.

Though this is my assumption. I’ll probably try looking around to see if I can find a definite answer to it.