# MOC foreclosure sale



## bobmcgraw (Mar 8, 2014)

There was a notice in the Maui News last week about a foreclosure sale for MOC properties (see attached scan of the legal notice).

The sale is scheduled for March 25 in Wailuku.  The notice says the Ownership interests shall be sold either in a single lot or in several lots.

I wonder if Marriott will use this as an opportunity to get a bunch of prime inventory at fire sale prices for the Trust Points program.  Wouldn't surprise me if they came in a bought the whole lot.


----------



## dioxide45 (Mar 8, 2014)

bobmcgraw said:


> There was a notice in the Maui News last week about a foreclosure sale for MOC properties (see attached scan of the legal notice).
> 
> The sale is scheduled for March 25 in Wailuku.  The notice says the Ownership interests shall be sold either in a single lot or in several lots.
> 
> I wonder if Marriott will use this as an opportunity to get a bunch of prime inventory at fire sale prices for the Trust Points program.  Wouldn't surprise me if they came in a bought the whole lot.



If they do buy these up at the foreclosure auction, we should be able to see them conveyed to the trust. I will keep an eye out and post it in the Recorded Trust Documents thread.


----------



## n777lt (Mar 9, 2014)

Whew! that's a lot of unpaid maintenance fees! And shame on the Owners' Association for waiting until some of them exceeded $10K (though with this bulk foreclosure action, I guess there are economies of scale...)


----------



## BocaBoy (Mar 9, 2014)

bobmcgraw said:


> There was a notice in the Maui News last week about a foreclosure sale for MOC properties (see attached scan of the legal notice).
> 
> The sale is scheduled for March 25 in Wailuku.  The notice says the Ownership interests shall be sold either in a single lot or in several lots.
> 
> I wonder if Marriott will use this as an opportunity to get a bunch of prime inventory at fire sale prices for the Trust Points program.  Wouldn't surprise me if they came in a bought the whole lot.


Can you tell if these are all for unpaid maintenance fees or are some also for mortgage defaults?


----------



## Chrispee (Mar 9, 2014)

Why would Marriott bid on them at auction when they can just exercise ROFR after the fact without driving up prices?


----------



## Fairwinds (Mar 9, 2014)

Chrispee said:


> Why would Marriott bid on them at auction when they can just exercise ROFR after the fact without driving up prices?



Good point. You would think that there would have been something in the announcement about that.


----------



## sjsharkie (Mar 9, 2014)

Chrispee said:


> Why would Marriott bid on them at auction when they can just exercise ROFR after the fact without driving up prices?



Because in some states, case law has held that a foreclosure does not constitute a bonafide offer and therefore is not a triggering event for ROFR.  In these states, the county clerk would transfer ownership to the winning bidder directly and ignore the ROFR clause.

Obviously, you need to check specific case law in Hawaii.  However, I know in states like Florida, there is existing case law to support this.  I've tried to bid on DVC foreclosure properties in Orlando for this reason and Disney aggressively outbids me every time I have tried.

-ryan


----------



## bobmcgraw (Mar 9, 2014)

BocaBoy said:


> Can you tell if these are all for unpaid maintenance fees or are some also for mortgage defaults?



All I have is the notice from the paper.  Don't know what drove the unpaid amounts.


----------



## MOXJO7282 (Mar 9, 2014)

What I wouldn't give to be a part of this auction.  Sucks that the auction has to be in Maui. I'd probably fly anywhere in the continental US but not all the way to Maui. This seems to give Marriott an unfair advantage or even a savvy local broker because who will really be in attendance.


----------



## dioxide45 (Mar 9, 2014)

Chrispee said:


> Why would Marriott bid on them at auction when they can just exercise ROFR after the fact without driving up prices?



As Ryan indicated, it depends on state law. But in most cases, ROFR is seen as an inhibiting factor to a foreclosure sale, so that is why it doesn't come in to play.

Also realize that MVCI wants to cover the lien, so they will bid the price up at least to cover their lien so they can become whole.


----------



## dioxide45 (Mar 9, 2014)

Looking at some of these lien amounts, why didn't the people just list their weeks for sale through a broker? I would expect that the proceeds from the sale would have been enough to cover most if not all of these liens?


----------



## Fairwinds (Mar 9, 2014)

MOXJO7282 said:


> What I wouldn't give to be a part of this auction.  Sucks that the auction has to be in Maui. I'd probably fly anywhere in the continental US but not all the way to Maui. This seems to give Marriott an unfair advantage or even a savvy local broker because who will really be in attendance.



I wonder if physical attendance is required. If you really are serious buyer you could call for the auction particulars. They might provide you with a phone proxy.

I guess the hard part is knowing what your biding on. But again the auctioneer might provide details.


----------



## sugar apple (Mar 9, 2014)

dioxide45 said:


> Looking at some of these lien amounts, why didn't the people just list their weeks for sale through a broker? I would expect that the proceeds from the sale would have been enough to cover most if not all of these liens?




Speaking from someone who lost a unit to a foreclosure, it just never dawned on me to do this at the time. During that time frame, I had a lot going on and in hindsight I wish I would've come on Tug and asked "in danger of foreclosure, what should I do". 


Sent from my iPad using Tapatalk


----------



## vacationtime1 (Mar 9, 2014)

bobmcgraw said:


> There was a notice in the Maui News last week about a foreclosure sale for MOC properties (see attached scan of the legal notice).
> 
> The sale is scheduled for March 25 in Wailuku.  The notice says the Ownership interests shall be sold either in a single lot or in several lots.
> 
> I wonder if Marriott will use this as an opportunity to get a bunch of prime inventory at fire sale prices for the Trust Points program.  *Wouldn't surprise me if they came in a bought the whole lot*.



It would surprise me if it doesn't.

I would speculate that the reason Marriott waited so long to foreclose (i.e. the reason the captive HOA waited so long) is so no one other than Marriott would be interested in purchasing ~175 units at one time.

The bid price will cover the arrearages (making the HOA whole).  Marriott can then sell the units through its resale department, or as others suggest, transfer the units into the trust in order to create trust inventory at MOC and then sell points.

The mark-up will be breathtaking.


----------



## OutAndAbout (Mar 9, 2014)

bobmcgraw said:


> There was a notice in the Maui News last week about a foreclosure sale for MOC properties (see attached scan of the legal notice).


Not familiar with foreclosure sale, is the "winner" responsible for paying the line amount in addiction to the bid amount?  (so actual purpose price is the sum of the two?)

Does someone have a magic decoder ring on how to tell which resort (converted hotel or new towers) and the floorplan? (maybe coded in the "Ownership Interest No" or "L.Ct./BOC Doc No")


----------



## GregT (Mar 9, 2014)

This is an interesting list -- most are in the original tower, a few in the new tower.

Of particular interest in the new towers, I see a 2BR OF in Lahaina Towers, fixed week 4, first floor unit (that's 1210D04).   There's also a 2BR OF float between Lahaina/Napili (that's 4210D19).   I think 4203D15 is a 2BR OV in Lahaina.

Thanks for posting this -- I agree with others that I think Marriott will buy the lot and we will look for these units to appear one day in the Trust.

Best,

Greg

Edited to add:  I can't tell if the Lien amount includes any mortgages, or is just delinquent MFs.   I think it is the HOA that is initiating the foreclosure proceedings, so may just be the MFs.


----------



## csalter2 (Mar 9, 2014)

*What does recorded mean?*

What does the date recorded refer to? Does it refer to that date of recording when someone bought it or does it refer to the recording of foreclosure?


----------



## OutAndAbout (Mar 9, 2014)

csalter2 said:


> What does the date recorded refer to? Does it refer to that date of recording when someone bought it or does it refer to the recording of foreclosure?


I don't know, but as the highest Lien Amounts seem to correspond with the oldest recorded dates (most 2008 - 2010), I would guess this is when the Lien was first recorded.


----------



## OutAndAbout (Mar 9, 2014)

OutAndAbout said:


> Does someone have a magic decoder ring on how to tell which resort (converted hotel or new towers) and the floorplan? (maybe coded in the "Ownership Interest No" or "L.Ct./BOC Doc No")





GregT said:


> This is an interesting list -- most are in the original tower, a few in the new tower.
> 
> Of particular interest in the new towers, I see a 2BR OF in Lahaina Towers, fixed week 4, first floor unit (that's 1210D04).   There's also a 2BR OF float between Lahaina/Napili (that's 4210D19).   I think 4203D15 is a 2BR OV in Lahaina.



Based on GregT's comment I presume "Ownership Interest No" starting with "MH" are the original building and "MU" are the new tower. 

If a current owner wanted to sell, I wonder if the HOA would include them in the offering (of course if they pay the incremental cost of being added).


----------



## vacationtime1 (Mar 9, 2014)

OutAndAbout said:


> If a current owner wanted to sell, I wonder if the HOA would include them in the offering (of course if they pay the incremental cost of being added).



No rational seller wants to sell through a foreclosure sale -- an distress auction on the steps of the county courthouse.  This method virtually guarantees the lowest possible purchase price.

Marriott will probably bid in the total amount of the ~175 liens and buy the entire lot for that price.

If any unit is worth less than the lien on that particular unit, the HOA will probably exclude that particular unit(s) from the overall auction and sell it/them separately.  Of course, no one will buy it (why buy a unit worth $10,000 subject to an $11,000 lien?) and separate arrangements will be made.  Note that the foreclosure notice attached to OP's post permits the HOA to auction some or all of the units as a group.


----------



## sjsharkie (Mar 9, 2014)

vacationtime1 said:


> If any unit is worth less than the lien on that particular unit, the HOA will probably exclude that particular unit(s) from the overall auction and sell it/them separately.  Of course, no one will buy it (why buy a unit worth $10,000 subject to an $11,000 lien?) and separate arrangements will be made.  Note that the foreclosure notice attached to OP's post permits the HOA to auction some or all of the units as a group.



IMHO, they will likely group all lots together as a single group.  It is unlikely they will sell the units that are worth less than the lien as separate items.

This way, they aggregate all liens together (or at least in favorable groupings) and in all likelihood, the properties with huge liens will weight the average favorably in Marriott's direction.  This does the following:

1.  The lien mean probably exceeds the resale value for the aggregate properties.  This will ensure that third parties do not pickoff the units with lower liens -- they are averaged out by the units with the higher liens.

2.  Selling as a lot also requires third parties to come up with more money.  The average individual is probably not interested in picking up all of the properties as this requires more capital up front.

If the Board was truly independent, I might side with vacationtime.  However, since there is heavy developer/management influence, I suspect the HOA will just take back the units and transfer them back for consideration to Marriott for resale/trust inclusion.

-ryan


----------



## sjsharkie (Mar 9, 2014)

GregT said:


> Edited to add:  I can't tell if the Lien amount includes any mortgages, or is just delinquent MFs.   I think it is the HOA that is initiating the foreclosure proceedings, so may just be the MFs.



Greg highlights an important point.  It is important to do a proper lien search so that any bidder is positive they are buying the actual unit versus buying time (which would be the case if there is a mortgage or other lien ahead of the HOA).

-ryan


----------



## dioxide45 (Mar 9, 2014)

vacationtime1 said:


> It would surprise me if it doesn't.
> 
> I would speculate that the reason Marriott waited so long to foreclose (i.e. the reason the captive HOA waited so long) is so no one other than Marriott would be interested in purchasing ~175 units at one time.
> 
> ...



I don't think they will sell these units through the resale department. If MVCI picks any of them up, they will all go to the trust. The fact that they wouldn't sell Greg his prized unit tells us that any weeks will go to the trust. They have no appetite in selling individual weeks any more.



vacationtime1 said:


> No rational seller wants to sell through a foreclosure sale -- an distress auction on the steps of the county courthouse.  This method virtually guarantees the lowest possible purchase price.
> 
> Marriott will probably bid in the total amount of the ~175 liens and buy the entire lot for that price.
> 
> If any unit is worth less than the lien on that particular unit, the HOA will probably exclude that particular unit(s) from the overall auction and sell it/them separately.  Of course, no one will buy it (why buy a unit worth $10,000 subject to an $11,000 lien?) and separate arrangements will be made.  Note that the foreclosure notice attached to OP's post permits the HOA to auction some or all of the units as a group.



I don't think they can exclude a week if it doesn't sell for the amount of the lien. Hawaii is a non-recourse state, so they likely can't go back to the debtor to collect the different between the lien amount and the sale amount either. For this, I agree with Ryan that they will likely group these in lots and sell multiple weeks/units in one lot.



sjsharkie said:


> Greg highlights an important point.  It is important to do a proper lien search so that any bidder is positive they are buying the actual unit versus buying time (which would be the case if there is a mortgage or other lien ahead of the HOA).
> 
> -ryan



I don't think this matters. Any proceeds from the sale will go to the first lien holder and then the second. The unit should then transfer to the buyer unencumbered. If these are MF debts, then this may be a reason MVCI will be active in bidding if they have their own mortgage liens as well.


----------



## OutAndAbout (Mar 9, 2014)

OutAndAbout said:


> Not familiar with foreclosure sale, is the "winner" responsible for paying the line amount in addiction to the bid amount?  (so actual purpose price is the sum of the two?)





dioxide45 said:


> I don't think this matters. Any proceeds from the sale will go to the first lien holder and then the second. The unit should then transfer to the buyer unencumbered. If these are MF debts, then this may be a reason MVCI will be active in bidding if they have their own mortgage liens as well.



I'm not clear if once you win the auction you have to pay out the lien or if the lien will be settled by the proceeds of the sale.  If it is the latter, then the lien amount would be irrelevant, but since it's included, I expect the lien has to be settled by the new owner(s).


----------



## dioxide45 (Mar 9, 2014)

OutAndAbout said:


> I'm not clear if once you win the auction you have to pay out the lien or if the lien will be settled by the proceeds of the sale.  If it is the latter, then the lien amount would be irrelevant, but since it's included, I expect the lien has to be settled by the new owner(s).



This is really no different than any other real estate foreclosure. If the sale doesn't cover the lien, the lender is out of luck. The new owner doesn't have to settle anything. Though this is why you will see MVCI aggressively bidding these to at least cover the liens.


----------



## dioxide45 (Mar 9, 2014)

OutAndAbout said:


> Based on GregT's comment I presume "Ownership Interest No" starting with "MH" are the original building and "MU" are the new tower.
> 
> If a current owner wanted to sell, I wonder if the HOA would include them in the offering (of course if they pay the incremental cost of being added).





OutAndAbout said:


> I don't know, but as the highest Lien Amounts seem to correspond with the oldest recorded dates (most 2008 - 2010), I would guess this is when the Lien was first recorded.





csalter2 said:


> What does the date recorded refer to? Does it refer to that date of recording when someone bought it or does it refer to the recording of foreclosure?



Since many of the recording dates are the same, this appears to correspond to the recording date of the lien. Given that, I highly suspect that these are MF liens since mortgages would probably not be recorded in batches like this for all units that go to foreclosure. They do tend to record MF liens in bulk though.


----------



## Chrispee (Mar 9, 2014)

sjsharkie said:


> Because in some states, case law has held that a foreclosure does not constitute a bonafide offer and therefore is not a triggering event for ROFR.  In these states, the county clerk would transfer ownership to the winning bidder directly and ignore the ROFR clause.
> 
> 
> -ryan



Thanks for the interesting piece of info, I was unaware!


----------



## vacationtime1 (Mar 10, 2014)

dioxide45 said:


> I don't think they will sell these units through the resale department. If MVCI picks any of them up, they will all go to the trust. The fact that they wouldn't sell Greg his prized unit tells us that any weeks will go to the trust. They have no appetite in selling individual weeks any more.
> 
> I don't think they can exclude a week if it doesn't sell for the amount of the lien. Hawaii is a non-recourse state, so they likely can't go back to the debtor to collect the different between the lien amount and the sale amount either. For this, I agree with Ryan that they will likely group these in lots and sell multiple weeks/units in one lot.
> 
> I don't think this matters. Any proceeds from the sale will go to the first lien holder and then the second. The unit should then transfer to the buyer unencumbered. If these are MF debts, then this may be a reason MVCI will be active in bidding if they have their own mortgage liens as well.





dioxide45 said:


> This is really no different than any other real estate foreclosure. If the sale doesn't cover the lien, the lender is out of luck. The new owner doesn't have to settle anything. Though this is why you will see MVCI aggressively bidding these to at least cover the liens.




I agree that the units will probably go into the trust.  The only situations where the units might go through  the resale department is if the trust were already heavy with a  particular type of unit -- not likely for MOC, but possible.

But as for the units where the amount of the lien is more than the value of the unit, I expect that those units will be separated from the larger package of units and auctioned separately.  Marriott will not want to pay the lien amount for a particular unit if the unit is worth less than that amount.  If the unit were auctioned separately, the highest bid would be no more than the fair market value (i.e. less than the lien), and as you say, the remainder of the lien would be extinguished.  The HOA would be the loser here (the overdue MF's is what would be extinguished).

Yes, I am assuming that all of the liens are MF's and not mortgages.  I make this assumption because the HOA is the person doing the foreclosing and they are almost certainly not the mortgage holder.


----------



## sjsharkie (Mar 10, 2014)

dioxide45 said:


> I don't think this matters. Any proceeds from the sale will go to the first lien holder and then the second. The unit should then transfer to the buyer unencumbered. If these are MF debts, then this may be a reason MVCI will be active in bidding if they have their own mortgage liens as well.



No, I don't think that's how it works.  If the HOA is foreclosing, then it is their lien that is being satisfied.  If there is a mortgage lien that sits first, and the third party winning bid is only for the HOA lien amount, then the third party has title to the unit but is still subject to the first position mortgage lien.  Once the mortgagor forecloses, then they lose the title.

In large foreclosure markets (i.e. Orlando), there are professionals that go around buying up HOA foreclosures if they know they can make a profit renting out the property prior to the mortgagor actually gaining title.  The HOA forecloses because they know they can at least rent out the property until the mortgagor gets their act together and forecloses which for some big banks takes some time -- at least the HOA may recoup some of their dues in arrears back versus getting nothing in a mortgagor foreclosure.  (Actually in FL, it is worse for courthouse buyers because the mortgage foreclosure does not wipe out the HOA dues in arrears in most cases -- the new owner is still responsible for past HOA fees.)  Again, I speak to Florida because that is what I know, but I believe it works the same way everywhere else.

-ryan


----------



## sjsharkie (Mar 10, 2014)

vacationtime1 said:


> But as for the units where the amount of the lien is more than the value of the unit, I expect that those units will be separated from the larger package of units and auctioned separately.  Marriott will not want to pay the lien amount for a particular unit if the unit is worth less than that amount.  If the unit were auctioned separately, the highest bid would be no more than the fair market value (i.e. less than the lien), and as you say, the remainder of the lien would be extinguished.  The HOA would be the loser here (the overdue MF's is what would be extinguished).



The HOAs goal is to gain title of the property so that they can either (1) rent out the property to generate some cash flow where there is a 1st mortgage prior to the 1st mortgagor foreclosing or (2) gain title of the property outright (and wipe out any secondary liens) for resale to Marriott where they are the lien that sits in 1st position.

If Marriott or a bank holds 1st position (most likely where there is a 1st mortgage), the HOA foreclosure does nothing to that lien that sits ahead of it.  That is why the HOA is likely to package everything in large lots -- they want control of the units whether or not there is a lien that sits ahead of theirs.  In any event, since the unit is likely worth more than third-party market resale to Marriott (because Marriott can charge higher prices through their resale channel), the HOA would likely bid higher than third-party market resale for the units to gain control of the property.  My assumption based on what I see Marriott paying in the marketplace is that they will pay the HOA a higher than third-party market resale value for the unit (or outbid the HOA outright at the auction).

My conclusion is that the HOA does not want third-parties picking off properties at the auction -- they can make more money reselling them through the Marriott channel.  Packaging the units in bulk lots dissuades third-parties from overbidding them.

-ryan


----------



## BocaBoy (Mar 11, 2014)

dioxide45 said:


> This is really no different than any other real estate foreclosure. If the sale doesn't cover the lien, the lender is out of luck. The new owner doesn't have to settle anything.



Doesn't that depend on the state laws where the foreclosure occurs.  I think in some states that is not the case, but I have no personal experience.


----------



## n777lt (Mar 11, 2014)

GregT said:


> Edited to add:  I can't tell if the Lien amount includes any mortgages, or is just delinquent MFs.   I think it is the HOA that is initiating the foreclosure proceedings, so may just be the MFs.



That was my interpretation too...so I am confused (my property law prof was a flake, and my knowledge of property law shows it!) 

If the liens are JUST for the maintenance fees due to HOA, what has happened to any first mortgage holder's (Marriott?s) interest?  Easiest case: This lot includes only intervals that had already been fully purchased (whether from resales or the developer) so the ONLY lien on the property is for the MFs due to the HOA. Otherwise, you'd think the sale proceeds would have to go to pay off the first mortgage lien first, so the HOA, holding a subordinate lien, might get nothing...?
Real estate mavens, please elucidate!


----------



## dioxide45 (Mar 11, 2014)

BocaBoy said:


> Doesn't that depend on the state laws where the foreclosure occurs.  I think in some states that is not the case, but I have no personal experience.



A lot does vary by state law. Another thing to consider, just because you buy a property out of a foreclosure auction, it doesn't mean you own it outright. Depending on the state, there may be a redemption period where the original owner can redeem to get the property back. Though I don't really see anyone doing this for a timeshare.

This is why a lot of people invest in foreclosures and more so tax sales. Not to end up owning real estate, but to make money from redemption. The fees that the person buying the foreclosed home or taxes can charge can turn in to a tidy profit.


----------



## sjsharkie (Mar 11, 2014)

n777lt said:


> If the liens are JUST for the maintenance fees due to HOA, what has happened to any first mortgage holder's (Marriott?s) interest?  Easiest case: This lot includes only intervals that had already been fully purchased (whether from resales or the developer) so the ONLY lien on the property is for the MFs due to the HOA. Otherwise, you'd think the sale proceeds would have to go to pay off the first mortgage lien first, so the HOA, holding a subordinate lien, might get nothing...?
> Real estate mavens, please elucidate!



As I posted above, the HOA can foreclose, and that would only wipe out the liens that are positioned after theirs.  If there was a third party bidder that won, they would take possession of the unit, but still subject to the liens ahead of the HOA (i.e. a primary mortgage).  They could then take possession, but if their was a fist position lien ahead of the HOA, the first position lender can still foreclose.  So you are really just buying time in this example -- with Orlando properties there were professionals that did this and could rent out the property for a profit in between the time they won the HOA foreclosure auction and the bank got their act together and foreclosed on the property.  One really must do their research to ensure they understand that they have a clear, lien-free title for a particular unit.

State law and condo cc&r's will govern what/how the HOA can do so YMMV.  This should not be construed as legal advice and is based on my experience in bidding on timeshare foreclosures.

-ryan


----------



## Beaglemom3 (Mar 11, 2014)

Interesting article from ARDA:  http://www.google.com/url?sa=t&rct=...aXiZBC75XbXKnK8w7QnKukg&bvm=bv.62788935,d.dmQ

My two Marriott CH timeshares were non-judicial units sold at auction Sept. 2011.


Why Non-Judicial Foreclosure (NJF) for Timeshares?

1.  Characteristics of Timeshares:  Timeshare ownership enables owners to enjoy a vacation experience over the course of many years.  Timeshares, however, are not primary residential dwellings; they are vacation properties with short-term use, usually of a week or two.  In many states, the most common form of timeshare ownership is a deeded interest in real property. Other common forms of ownership involve trust interests that may or may not include a real estate interest, or memberships or licenses that are not considered to be real property.  Timeshare interests are not investments – they are intended for personal and family recreational use. This makes the timeshare industry a unique component of states real estate and hospitality industry that requires special treatment. 

2.  Nationwide Trend Moving Toward NJFs, Judicial Foreclosures Too Costly:  Applying judicial foreclosure laws to timeshare is costly, time consuming and a burden on the judicial system.  Because of this, the trend across the country has been moving toward adopting non-judicial foreclosures (“NJFs”) because such foreclosures are less expensive, more efficient and do not require substantial judicial supervision.  There are about 20+ jurisdictions nationally that allow NJFs for timeshare properties (as well as other real estate in some places).  A few of those states include Arizona, California, Florida, Hawaii, Illinois, Maine, New Hampshire, South Carolina, Texas and Vermont, among others.

3.  Timeshare Owners Associations Benefit from NJF:  The non-judicial foreclosure of association assessment liens saves the owners’ association substantial foreclosure costs, helps reduce the association’s bad debt more quickly, and reduces the burden on all of the timeshare owners who timely pay their annual assessments. 

4.  States Acknowledging the Distinction Between Timeshares And Residential Properties:  Because of the significant difference between timeshares and traditional residential properties, some states have acknowledged the importance of NJFs for timeshares while either prohibiting or limiting NJFs for traditional residential properties.  

5.  ARDA Proposed Legislation Provides Strong Consumer Protection Provisions: It is of critical importance to note that practically all timeshare foreclosure actions go uncontested because the owners are no longer interested in being involved with the resort and no longer use their timeshares.  However, to ensure that the rights of all timeshare owners are preserved, ARDA-supported NJF legislation allows timeshare owners subject to foreclosure to “opt-out” of non-judicial foreclosure and choose a court’s involvement and protection through the judicial foreclosure process.


----------



## frank808 (Mar 11, 2014)

These units for auction are for delinquent maintenance fees.  They have a separate auction for Foreclosure on Mortgages.  They will sell them as one big lot and not individually.  Though they could weed all the ones that the liens are greater than what the units are worth and put all the other units into one big lot.  It is up to the HOA which is mainly controlled by marriott.  I tried to buy some MKO units that were sold at auction for delinquent maintenance fees and marriott sold them all as one big lot.  Unless you have $500000 lying around you are not going to be able to outbid them.


----------



## MOXJO7282 (Mar 11, 2014)

So if someone went to one of these is there any chance they could score a few good OF units at a good price or is it more so you might get lucky on snag one?

If I knew I could get let's say (3) 2 BDRM OFs for $42k or so all-in including my travel costs, it would be well worth the trip IMHO.

Or would I really have to buy 10 or a big lot? I wish I knew because I'd be interested.


----------



## sjsharkie (Mar 12, 2014)

MOXJO7282 said:


> So if someone went to one of these is there any chance they could score a few good OF units at a good price or is it more so you might get lucky on snag one?
> 
> If I knew I could get let's say (3) 2 BDRM OFs for $42k or so all-in including my travel costs, it would be well worth the trip IMHO.
> 
> Or would I really have to buy 10 or a big lot? I wish I knew because I'd be interested.



I think there's little chance.

Marriott wants the units back and they have influence on the HOA. The HOA is not going to want to let the property go to a third party because they are only entitled to their lien + costs (e.g., legal fees, accrued interest, etc.) -- original owner gets any leftover after all liens and costs are paid. It's likely they will just group them in one or more large lots.  I find it strange that they don't have to publish the lot groupings, but I'm not sure if there is anyone at the county you could call since it is likely a NJF.

Plus you would have to do your due diligence to ensure that there is clear title and no other liens ahead of the HOA on the property.

Good luck.

-ryan


----------



## Beaglemom3 (Mar 12, 2014)

At the Marriott C.H. auction in Boston, all are sold individually, both judicial and nonjudicial. These were smaller auctions, though.


http://www.tugbbs.com/forums/showthread.php?t=132181  Commonwealth of Massachusetts law (thanks, Times02):  http://robinsonandgordon.com/10062010 Chapter350Actsof2010.pdf


http://www.tugbbs.com/forums/showthread.php?t=154467&highlight=custom+house+auction


----------



## GregT (Mar 12, 2014)

All, 

I think that Marriott will need to buy back all units that have a mortgage on them.   A new unit buyer at foreclosure is not obligated to assume the mortgage taken out by the original purchaser.  Accordingly, Marriott has a fiduciary interest in acquiring those units that have a mortgage on them, so the Note Owner does not lose out on the principal balance of the mortgage.  Our thesis is that all of these have a mortgage (or the unit would have been sold or given away), so therefore I agree with others who say that Marriott will buy them all.

For total clarity, Marriott no longer holds the mortgage, they've sold it to others, but they are servicing the mortgage and must protect the interests of the current owner of the note. 

Best, 

Greg

Edited to add: this may be another piece in the puzzle of how Marriott is going to acquire units for the trust.  It may not be coincidental that now is the time that the HOA is choosing to foreclose, when units have been delinquent during the tough(er) recent economic years.  Marriott didn't need units before (and wouldn't have pushed the HOA to foreclose), however other evidence like exercise of ROFR, suggest now is the time when Marriott is aggressive in getting units.   Perhaps we will see other HOA's also foreclosing.  This is a theory and may be coincidence as it is in the HOAs interest to get the units paying MFs again.


----------



## sjsharkie (Mar 12, 2014)

GregT said:


> All,
> 
> I think that Marriott will need to buy back all units that have a mortgage on them.   A new unit buyer at foreclosure is not obligated to assume the mortgage taken out by the original purchaser.  Accordingly, Marriott has a fiduciary interest in acquiring those units that have a mortgage on them, so the Note Owner does not lose out on the principal balance of the mortgage.  Our thesis is that all of these have a mortgage (or the unit would have been sold or given away), so therefore I agree with others who say that Marriott will buy them all.
> 
> For total clarity, Marriott no longer holds the mortgage, they've sold it to others, but they are servicing the mortgage and must protect the interests of the current owner of the note.



Greg--

I don't think your first paragraph is accurate.

The winner at auction of a HOA foreclosure is still subject to any liens that sit ahead of the HOA lien -- in most cases this is the primary mortgage.  That lien is not wiped out and the property can still be foreclosed upon by the primary mortgage holder.

The HOA of a timeshare does not have the urgency like an HOA of a condo unit because they are still able to rent out non-reserved units -- since someone who is delinquent on mfs will get their reservation cancelled (or be unable to make a reservation), the HOA can then rent out unreserved time for profit.  This is not the case with a condo unit as the unit is still occupied by the owner and the HOA cannot rent it out.

My theory is that the HOA is trying to save costs on the NJF proceedings by doing all the units at once, and I do agree with your point that with Marriott's appetite for units escalating in recent months, there was now reason to go ahead and foreclose.

I'm actually not sure if Marriott will bid.  They could or they just may have the HOA take over the units and then buy it from them.  I do agree that they will be sold in one or a few large lots and the HOA and/or Marriott will purchase them all.  I don't think any third party will bid because they are still potentially subject to first position liens.

-ryan


----------



## GregT (Mar 12, 2014)

sjsharkie said:


> Greg--
> 
> I don't think your first paragraph is accurate.
> 
> The winner at auction of a HOA foreclosure is still subject to any liens that sit ahead of the HOA lien -- in most cases this is the primary mortgage.  That lien is not wiped out and the property can still be foreclosed upon by the primary mortgage holder.



That's interesting -- so if I buy one of the units and pay-off the lien from the MFs, even though I've not assumed the Note, Marriott can still foreclose on the unit because of a DQ mortgage on the original buyer.

I guess that makes sense -- what a mess.  That has to kill anyone's incentive to bid, considering the risk of still losing the unit after "buying" it. 

I wonder if there is anyway to figure out what has a DQ mortgage and what doesn't?   

Best,

Greg


----------



## sjsharkie (Mar 12, 2014)

GregT said:


> I wonder if there is anyway to figure out what has a DQ mortgage and what doesn't?



Yes, you can do one of the following:

1.  Hire a title search company.  They will be able to tell you for a fee. Most times this does not make sense for timeshares because the cost is prohibitive.

2.  Search county records yourself.  The challenge is that I think Hawaii charges a fee for viewing a record.  I do searches myself in Orlando because it is free to view.  If there is a mortgage, it should be recorded and you should see a note of satisfaction once the mortgage is paid. This is not 100% foolproof so be advised you are taking a risk if you do a search yourself -- that is what title insurance is for.  The chances of there being something clouding title that is not in county records is pretty remote though for a timeshare -- but YMMV.

-ryan


----------



## mauialoha (Mar 13, 2014)

We are at the MOC now and will still be here on 3/25. I have saved the foreclosure notice that was posted in the Maui News. The very long list of ownerships that are being foreclosed is unbelievable and sad that so many purchased and cannot pay. 

We are thinking of going to this auction to see what happens....

Aloha...


----------



## GaryDouglas (Mar 25, 2014)

*Gulp...*

Looks like Marriott bought up the whole thing...


----------



## MOXJO7282 (Mar 25, 2014)

GaryDouglas said:


> Looks like Marriott bought up the whole thing...



Did they buy everything? The fact is there was mostly garden view 1 bdrm units but there were a few nice units as well.


----------



## GaryDouglas (Mar 25, 2014)

There were only a few entities involved in the bidding process, trying to get the best units.  They were outbid by Marriott, no matter how high they went.  After that, they took the rest...


----------

