Discounting a Mortgage Note
Let's say I go through the steps and the lender agrees to discount their 100,000 note and sell it to me for 75000. What what actually happens? What do they send me? The original note from the seller? Do I just write a check to them? Do they quitclaim on the property?
You would make a formal offer to purchase the mortgage via an assignment of that mortgage. If your offer is accepted, you would be directed to send them a check for the agreed upon amount. Your attorney would request and record the appropriate assignment of mortgage documents. You are now mortgagee.
No quit claim (deed) involved, no homeowner involvement, no ownership interest altered.
SSP,
Now, I have several questions.
I live in a state where we normally use Realtors, not Attorneys. Would you still expect that an attorney would be necessary? Or, perhaps, the bank would have the necessary documents?
The condition of the lien does not change, correct? If an NOD (NED in Colorado) had already been filed, it would still be in force, correct?
You would likely have an agreement to buy in place with the current owner contingent on the acceptance of the agreement with the bank. right?
Jom
[ Edited by Jom on Date 02/12/2003 ]
My response wasn't addressing a real property transaction but rather the discounted purchase of a mortgage & note. If you are buying a piece of paper for $75,000, would you want your Realtor to represent your interests?
Would you want your Realtor to perform due diligence to assure that the lien was valid?
Would you want your Realtor to record the Assignment of Mortgage?
Perhaps, if your Realtor was an attorney.
I guess I got confused. I thought since heeranyi asked about a quit claim being done that more was being asked than just a note discount. I completely agree that if you are just buying the note, then a lawyer would be recommended.
Heeranyi, are you trying to do a short sale?
Jom
No, I was actually asking about discounting a note. I have never done one yet but I wanted to be prepared when I do. The only reason I asked abou the Quit Claim was because I know that the note is secured by the property and I wanted to know how to release the old note holder from the property. Now I know that you just have an Assignment of a Deed of Trust in my state.