Paramus Home Sold at Auction 20% below Judgement!

So for a while now people have been talking about how banks are not willing to let properties go at foreclosures without counter bidding to get the house to "market value" or to get their judgment back.

Well, Saxon Mortgage Services, Inc. didn't play that game. They were happy to get what they could for this foreclosure on Freeland St. in Paramus, NJ that went on the auction block yesterday.

Saxon was awarded a judgment of $525,361.66 for the home at 623 Freeland St, which was purchased in 2006 for $535,000. They were willing to let it go at auction for $413,000. That's over 20% below the judgement. Will other lenders start doing the same rather than going through the trouble of dealing with the hassle of an REO themselves?

Maybe, maybe not. Do a search on Saxon Mortgage and you'll find a page with 21 customers that claim to have issues with them. And even if other lenders continue to do the same, read this post that may give you a better idea where house prices are going.

I think we're going to see more homes like these that sell well below their judgment, especially if they were bought in 2006, the height of the housing bubble. Lenders are better off letting go of properties sooner rather than later. If they gain possession of the property, there are costs involved in selling the property through their REO division.

Foreclosures don't happen overnight. Saxon was awarded the judgement almost 6 months ago. Foreclosure usually doesn't happen until 3 months after the first missed payment. So for 3/4 of a year, this home was losing value while the lender was not getting paid.

The original sale date was for the end of March but it was not auctioned off until yesterday (mid June). There could be any number of reasons for this including but not limited to the borrower trying to negotiate better loan terms and/or a repayment terms with the lender.

But did the buyer get a good deal? Well, in 2003 the house sold for $210,000. The map photo may be out of date. It's possible that the house was remodeled/rebuilt to match the size of some of the other homes in the area. I haven't done a drive by to see. That's the only thing I can think of that would justify a doubling in price from 2003 to 2006. 20% off of 2006 prices isn't a bad deal. It's maybe were house prices will be this time next year. As an investment property. Eh? But if the buyer was a homeowner looking to get a good deal on their residence, not bad.

If the photos are correct and it is still the same home and there were no major renovations or rebuilding. Is $430k for a 936sq ft ranch built in 1951 that sold in 2003 for $210k a good deal? I really hope the photos are out of date. Anyone more familiar with the area know?