Legal Question in Real Estate Law in California

Re: Can i buy?

I agree with Attorney Whipple's assessment, however, with one exception. Why wait for the foreclosure sale to take place? If you have the ability to obtain a loan to buy the property, why not get the loan and pay off the current mortgage before the foreclosure sale. FHA loans require 3.5% down payment, conforming Fannie Mae/Freddie Mac loans will require 20% down payment - but these are only for owner-occupied homes. Since you will not live there, you will probably need 30% down payment for a traditional loan. But, you cannot buy the property at the foreclosure sale THEN get the loan, you must show up at the sale with cash, letter of credit or proof you can wire-transfer the money by close of business that day.

The bank is not likely to take less than what it is owed at the foreclosure sale, so you aren't likely to save anything by waiting and bidding at the auction. More importantly, you risk another bidder showing up and out-bidding you. Up to five days prior to the foreclosure sale, your mother has the right to pay off the entire loan balance and stop the foreclosure. If you can get a loan to do so, it will save you the several thousand additional dollars the lender will add to its "full credit bid" at the auction for the last-minute costs associated with conducting the actual foreclosures sale. Absent that, you will have to have cash, a letter of credit or other proof that you can pay the bank what you bid by the close of business that day.

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Re: Can i buy?

Anyone can bid at a foreclosure sale, with the possible exception of the trustee who is conducting the sale; it would have a conflict of interest. However, buyers are expected to pay cash on the spot, or have proof that they can pay by sundown. Typically, foreclosure buyers use cashier's checks, letters of credit, wire transfers or the like to place their cash in the hands of the trustee on a smae-day basis. An exception to this rule is that the foreclosing creditor pays by offsetting its bid against what the borrower/debtor owes it.......so if they are the winning bidder at or below the amount owed, as so often is happening lately, no cash changes hands. If, as is likely, you don't have the cash, you might be able to team up with a financial backer such as a hard-money lender or investor. A starting point for learning about this might be to buy one of those softcover how-to self-help law books on "investing in foreclosure properties" or the like. Nolo Press is a typical publisher of books of this kind.