Buying My Brothers' In-Law Place

Comments(4)

• 
  JohnMerchant22nd January, 2004

  "My two brothers' in-law are about to lose their Missouri house. The auction is scheduled for Jan 29, initiated by the first bank. Here are the details:
  House appraised at 97K last Feb.
  First mortgage 56K remaining
  Second 24K remaining
  One brother filed BK already a few years ago, he wants to walk away and start over.
  The other wants to ideally keep the house but has no way to catch up on the payments or pay anything going forward. But he sees the writing on the wall.
  The house needs about $10-15K in work.
  
  My plan was to short sale both mortgages, fix up the house and sell it. I have hard money financing already lined up.
  
  Would the bank delay the foreclosure if a short sale was in process. "
  
  Probably not, unless the banker is convinced his check is in the mail. Or has already received your check.
  
  "Will the bankruptcy be a problem?"
  
  Shouldn't be, as the discharge is undoubtedly way long ago now, and is long over with."
  
  :"What could I expect each holder to take for payment? "
  
  You'll have to negotiate with both. Probably the 2d would sell for peanuts as they're about to be completely eliminated in the 1st foreclosure.
  
  The 1st holder might give you some discount, but might not, as they undoubtedly know the property's value.
  But you should ask them as they might, with the repairs in mind.
  
  If the banks take a lower value for payment in full, will they still be able to report a bad debt on my in-laws credit?
  
  They probably would not change anything they've reported. But your BIL could prove the debt was paid if you do pay it, so as to help his own credit reporting situation...but being post BK discharge will probably make this point moot as most anybody being a year or so post BK can go get new loan.
  
  One other thought. The foreclosing trustee might agree to continue the foreclosure for YOU if you now own and control the 1st note, so you might be better off continuing and foreclosing on the 1st so as to make the 2d bid or be eliminated...and the 2d would then be completely gone as the BK would have wiped out the debt and the FC by the 1st note holder would now eliminate the 2d lien.
  
  Good luck.
  
  John Merchant

• 
  MikeCzopek22nd January, 2004

  Thanks John for the detailed reply.
  
  The one thing that I didn't clearly state was that the BK has been since the second was taken, so is still in effect. My inexperienced thought would be that being in BK already would make it easier to get better terms on the short sale.
  
  Also, what's BIL?
  
  Thanks again.

• 
  InActive_Account23rd January, 2004

  Was his BK a Ch 7 or Ch. 13?
  
  I think the BIL is Brother-in-Law...

• 
  MikeCzopek23rd January, 2004

  Chapter 7. and the house is an exemption
  
  Brother in Law - Was thinking too hard on that one.[ Edited by MikeCzopek on Date 01/23/2004 ]