Phew.. I just got off a 1.5 hour conference call with the other mortgage holders on the Louisiana mortgage that is going to foreclosure a week from today. We basically went over the various options we have open to us and how we want to instruct our attorney to bid at the auction. The opening bid at the auction starts at an amount equal to the foreclosure auction costs, which is less than $2,000. We will instruct our attorney to bid the price up to our costs, including the back interest, late fees, etc., if anyone else is bidding. If no one bids, the place is ours for the cost of the foreclosure fees.
We had a couple alternatives. Assuming there are other bidders, we could opt not to bid up to the amount we are owed. In effect, this would be a short sale, since we would be accepting a price of less than what we are owed. No one on the call was too excited about doing this. We could also opt to bid more than what we are owed. We would do this if we felt the properties were worth more and could be worked on and improved to increase their value. Although we do feel the buildings are worth more, this raises other issues - which people will own it, who will handle the renovations, who will provide the additional capital necessary to make the improvements, etc. Rather than get into all that, everyone pretty much feels it would be better to just take our money and get out. So that is how we arrived at the decision to bid the price up to what we are owed and no higher.
Of course, all those questions will need to be addressed anyway if no one bids or no one outbids us and we end up owning the property anyway.
Lastly, there is always the possibility that Joe will file for bankruptcy the day before the auction. (Personally, I feel he will.) He is also facing 2 foreclosures on properties in Texas on that day, plus 2 more foreclosures in January, so he doesn't have a lot of other options. However, we have a couple of investors with lots of bankruptcy experience on board and they have a plan in case this does happen. All a bankruptcy would accomplish is delay the foreclosure by a couple of weeks.