Splitting A Lot Off Of A Home With A Mortgage.
Anyone ever dealt with this. There is a person that owes about $100k. There is a house and two other lots. They are $8k in arrears. We are willing to buy the lot for $12k. Do you think the bank will accept $12k putting $4k towards the principal to release the lien on the lot? Or how does this work?
First do a check of the last recrded deed to see if the mortgage is secured by the lots as well as the house. It may bee that the owner has the lots clear and the house is encumbered. If you are not so lucky, then the owner can ask for a partial release of the collateral to free up a lot for sale. The lender may entertain this option, but only if thy get their money. It alo depends on the value of the remaining collateral.
I've done a partial release twice with ountrywide, and it can take up to thirty days...
Good luck
During a foreclosure proceeding you will find that most lenders are reluctant to release a part of their secured interest. This simply lessons the value of their secured interest.
Now I am not saying this can not be done, but in a foreclosure time is a factor, asset value is a factor and the lenders motivation a BIG deciding factor.
Now I have done this before my self with a few foreclosures but it is just not something that occurs often primarily due to the time it takes for this type of purchase.
The lender in this case will most likely want the full 8k in arrears before they will consider and it the release of the two lots lessen the value of the secured property below the amount invested they will most likely have no interest in the deal.
In a nutshell, get the subdivision paperwork in order (property descriptions, deeds, revised property survey, etc.) and purchase the entire parcel of property from the distressed Homeowner.... but do not finance the two lots. Then sell the house back to the former owner, keeping the two lots free and clear.
Easier said than done.