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Why are Banks Setting the Opening Auction Bid Below The Principal Balance?

By Implode-Explode Heavy Industries

"I attended a foreclosure auction in Bellevue, WA last week to discover if the rumor was true that banks are opening their bids below the amount owed. I received confirmation from three professional investors that yes, the banks have been doing that, it?s no secret, and there seems to be no discernable pattern. It?s not one particular bank or lender, it?s not particular types of property or in any specific area. It appears to be random."

Full post as published by Mortgage Lender Implode-o-Meter on May 02, 2009 (boomark / email).