Clear Opening bid, total debt bid, high-low bid, specified bid. would surely appreciate an explanation
The trustees sometime seem to make these things up as they go. Here is my understanding of each:
Clear opening bid: I believe they are simply indicating that it has been cleared for sale, and that there will be no further bids.
Total debt bid: Indicates that the opening bid represents the total amount due to the lender on the auction date
Specified bid: Simply means that the lender has specified the bid. In this case it has to be for an amount equal to or less than the total amount owed.
High-Low bid: This means that the lender is going to place a “low” opening bid, but bid against third parties up to a “high” bid. The high bid can still not be for more than the amount owed to the lender unless they show up with cash like anyone else.
Key things to understand:
- That the lender is not taking the property to sale. The trustee is the seller, and the lender has to bid in order to protect their position. The lender always gets to place the first, or “opening” bid.
- The lender is allowed to “credit bid” - meaning bid without bringing cash to the auction- up to the amount they are owed. How they choose to do this is up to them. They can open the bidding at $1 and bid up third parties $1 at a time if they want. But once they reach the total amount they are owed they have to show up with cash like everyone else.
- When the sale is over the trustee deeds the house to the “winner”. This will be the lender if no 3rd party places a higher bid and the property will become bank owned.
Thanks Sean, that was really helpful.