Can you contact the lender before the homeowner
Instead of going directly to the default homeowner to make an offer on a pre foreclosure, why not go directly to the lender to work out some kind of a deal.
This can be done, right?
Please give advice.
The bank doesn't own the property they merely have a lien for the amount of the mortgage. The owner has the deed so you will have to negotiate with him/her about the sale.
You can go directly to the lender if you want to purchase their note on the property. You will not need the home owner for that. You will be buying the mortgage not the house.
If you talk to the bank first, they might advise the homeowner to speak with you about a deal. Wouldnt that make negotiating easier with the homeowner.
As with your example, I am working a deal right now that the property is valued at about $100,000. This first mortgage owes $65,000, the 2nd is for $38,000. The 1st will let me assume for balance, the 2nd will not deal. I think they want to see if they can pull a large sum out of me. The property is going to the court house in about 5 weeks. I am going to go ahead and assume the 1st mortgage, and also assume the foreclosure postion of the bank, so that I can continue to foreclose in a couple of weeks. My hope is that the 2nd will not show up to bid on it, but even if they do, I will get my investment back, and the most that I could lose is a few hundred bucks in attorney fees.
Bamz,
Just a heads up. Have you pulled the docket file from the court house and looked at the second mortgage lien? If the reason for the foreclosure is divorce, then the second mortgage may be in just one name, the remaining spouse. If the deed holds both names, and the 2nd mortgage holds just one name it would be considered defective. You would not be obligated to pay it at all.
Also if you could get the 2nd lein holder to deal for say 5K, then you could wait for other bidders at the auction to increase
your posiiton by bidding the sale price higher than your 5K investment in the second. Good luck
This is an interesting concept to me, that the lender is going to just let you assume the mortgage, when it's not foreclosed yet. If you're not buying out the mortgage, and the homeowner still owns the property, how can you take their place as the payor of the note? I'm just curious - something isn't adding up in my head about this one. I can understand buying out the mortgage and continuing the foreclosure, but how in earth can you assume it, without the permission of the person who is currently responsible?
Please tell me - fascinating!
P.S. Is this a small-town bank, or a major lender? I'm just curious. I would think lenders without REO departments would be more anxious to dump foreclosures than those prepared for them - right?
Dealym,
That is a good thought, thank you for sharing. Unfortunately it is the other way around. The first mortgage is in only one name, and the second mortgage is in both.
Alarson,
Great question. I used the word "assume" the mortgage, but really what I am doing is buying it out, but with that, I assume the foreclosure position of the bank, which is only a few weeks out from going to the court house steps.
Bamz,
Is this a local bank your dealing with or a major lender?
And what steps should I take to buy a note that's in foreclosure?
Thanks
Thank you all so much for your immediate responses
Ellihue2,
This bank is not necessarily a local bank. It is located in most of the larger cities in our area. But of course they are not as big as a countrywide either. So somewhere in between I would say.
The only reason that I proposed to buy this note from them is because of the significate difference between the first and the second. And after speaking with the second, I have a feeling that they will not show up to bid at the courthouse. So I feel fairly confident that I could delete thier lien in just a few weeks. There probably will be an additional 3% fee of the sales price to be paid to the Sherrif for conducting the sale, but I have already included that number in my evaluation. If you don't feel comfortable buying a note, you could try to work out a deal with the 1st mortgage in advance, that you will purchase the note for $x as soon as the sale closes. This way you use their money and you let them go through the process. Are you working on a situation that it would make sense to buy the 1st mortgage out?