Caveat emptor

“Buyer beware”, yeah be very, very ‘ware.  The Frog sent me an article this morning about a family who had purchased a foreclosed home at auction.  They thought they’d gotten the bargain of the century, a house in California for just under $100 grand.  What they really bought was the second mortgage on the house.  Unbeknownst to them the Bank holding the first Mortgage (Wachovia, now Wells Fargo), sold only the second mortgage at the foreclosure auction.  They then proceeded to let the family move in and renovate to the tune of $13,000 before showing up at their door and foreclosing on the first mortgage effectively taking the house and their $97,606 from them.  Dirty tricks?  For sure, but it appears this may actually be legal.

The lawyer said – and the judge agreed – that the auctioneer has no obligation to disclose whether loans being sold are first or second liens.

What bugs me the most about this is that it’s not a case of right hand not knowing what the left is doing.  Wachovia held both mortgages and Wells Fargo knew what they were doing when they foreclosed on the first mortgage after having sold these people the second.  They say it was the consumer’s responsibility to know what they were buying even though they and the auctioneers didn’t disclose that it was a second mortgage.  In my humble opinion this sale was fraud.  Plain and simple.

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