Buying Delinquent Note From Lender
Hi all,
I am VERY VERY new to note buying and had some very basic questions to investors who have worked with distressed (pre-foreclosure) property owners and who attempted to buy the delinquent note from the lender.
I worked with a couple to come up with a solution but because of their marital problems, the husband refused to even entertain the idea of a short sale. Thus, the idea of buying the non-performing note from the lender directly. The problem: I have never done this before. My questions are as follows:
1. Does lender just assign the note over to me under same agreement as it was originally in?
2. Do they, by assigning this note, give me a right to foreclose on the note also as they can?
3. Do I just pick up with foreclosure proceeedings where they left off or do I start a new process myself
4. What does it cost to foreclose on the owners?
5. What happens to the arrears amount? Does the lender just eat that amount?
6. Am I able to offer the owners some money for the title during buying of the note?
Sorry if these questions seem juvenile but I need to know. Thanks.
Ed
Wow, nobody???
1. Does lender just assign the note over to me under same agreement as it was originally in?
Yes, the lender will execute an additional document assigning the original note and mortgage to you.
2. Do they, by assigning this note, give me a right to foreclose on the note also as they can?
Yes, you are a "holder in due course" of commercial paper which means you have all the rights of collection which the original maker of the note had.
3. Do I just pick up with foreclosure proceeedings where they left off or do I start a new process myself
The term of art is that you "step into the shoes" of the foreclosing lender-- i.e. you occupy exactly the same position as they did.
4. What does it cost to foreclose on the owners?
Depends on lots of things. Better to ask the attny who is foreclosing on the note currently for a price.
5. What happens to the arrears amount? Does the lender just eat that amount?
Usually these notes are sold at a substantial discount to the face (something like 50 cents on the dollar is normal) The arrearage becomes yours along with the assignment.
6. Am I able to offer the owners some money for the title during buying of the note?
Yes.
Sorry if these questions seem juvenile but I need to know. Thanks.
Ed
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