Do banks cooperate with investors buying properties before the auction?
A. Banks do not like to have properties go to auction. They will do almost anything to avoid it. They will reach for any viable alternative like a drowning person clutching for a rope. Why? Because the secondary markets that purchase mortgages from banks do not like to see banks with high foreclosure rates. The federal bank regulators also give extra scrutiny to the banks with the highest foreclosure rates. Also, banks don’t like getting stuck with properties. It’s a big unknown to them. They often lose money. A classic example of a bank cooperating with savvy investors is the “short sale”, whereby a bank accepts less than the total amount of principal outstanding. There are very books which explain how this works.
