4 Days Until Forclosure Sale
This is really a 2 part question.
A lady called me who is 4 days from foreclosure, she has a first for 118k and a second for 30k. The property is worth about 165k.
The first is forcing foreclosure.
If I offered 117k to the first and they accepted would this be a short sale and eliminate the 2nd position?
and
Since there is so little time left, what could I possibly do to entice the bank to delay the foreclosure sale another month?
Thank you.
Well with 4 days to go, a SS would be tough. Since subordinate loans get wiped out if the 1st forcloses, why not just show up at the courthouse steps and bid the full amount of the first. You get the house for 118K in theory...sounds like instant equity to me. Unless, of course, it gets bid up. As far as a ss though, it sounds as though there's equity, which wouldn't provide much motivation for the 1st lienholder to short it. The 2nd is the guy will to short here for pennies on the dollar. You'd have to get them to agree to it first, then stop the forclosure on the first. That's gonna require you to write a check.
If the property was purchased prior to the foreclosure the 2nd would not be eliminated.
You have limited time to accomplish a short sale, but it can be done if the lender agrees to delay the sale.
You will need to negotiate with both the 1st and the 2nd prior to the foreclosure sale.
Consider the fact that the foreclosure is for 118k and the value is 165k with a spread of 47k most likely if you know this so does the lender.
There is no point to spend all the effort of a short sale for a difference of 1k.
If the value is 165k and the 1st is 118k with the 2nd at 30k I would first get the subject property under contract subject to working out an agreement with the lenders and than seed if the trustee or sheriff will delay the foreclosure proceeding based upon the purchase agreement! And than work on a discount offer with the 2nd as they have the greatest potential for loss if the 1st forecloses.
The 2nd would have to bid a minimum of 118k to protect their 30k investment.
This sale most likely could be stooped by simply bringing the 1st current.
[addsig]
Quote:
On 2004-12-02 09:00, roccodawg wrote:
Well with 4 days to go, a SS would be tough. Since subordinate loans get wiped out if the 1st forcloses, why not just show up at the courthouse steps and bid the full amount of the first. You get the house for 118K in theory...sounds like instant equity to me.
This is not a bad idea. I was thinking about something similar, what do you think?
The lady I am dealing with actually inherited the property when her sister died a couple months ago. What if we allowed it to go to auction, it shouldn't affect her credit since she was not on the loan, and hopefully the second will be wiped off at auction. Then use her right of redemption to get the property back?
Does that work? Too many variables?
Quote:
On 2004-12-02 09:25, JohnMichael wrote:
If the property was purchased prior to the foreclosure the 2nd would not be eliminated.
Sorry, I was told by my REO Agent that if the 1st took a short it would eliminate the 2nd. That is why I was hoping the 1st would take a very small short. But obviously the 1st would have very little motivation to do so.
Check the legalites of foreclosure. If you buy at the sale or even redeem after the sale, the first's foreclosure technically is not complete, and the second could survive it. You could try filing a delay of some kind--file an "answer" to the FC complaint, contest the amount or some misspelled word or incorrect detail, even file bankruptcy-- to buy you more time for a Sub2 or short sale. Bringing the payments current would do it, but then you're invested in it and may lose that amount if you don't follow through. Stay at arm's length from any delay tactic, though, as it might upset the bank so they won't want to work with you.
Quote:
On 2004-12-02 09:44, loon wrote:
You could try filing a delay of some kind--file an "answer" to the FC complaint, contest the amount or some misspelled word or incorrect detail, even file bankruptcy-- to buy you more time for a Sub2 or short sale. Bringing the payments current would do it, but then you're invested in it and may lose that amount if you don't follow through. Stay at arm's length from any delay tactic, though, as it might upset the bank so they won't want to work with you.
Great Advice! Thank you. I didn't want to commit myself to this deal financially by bringing the payments current because I don't think it is that great of a deal if the 2nd is not willing to negotiate down to little or nothing.
But I will suggest to the owner to try your delay tactics to give us more time. I will leave that completely up to her and stay out of it so the bank doesn't get mad at me.
Thanks.