Can You Short Sale/Buy A Judgement Lien
Looking at a property:
FMV = 140,000
1st mortgage = 90,000
Additional liens:
Jugement - citibank visa - 10,000
Judgement - Sears Roebuck - 5,000
Judgement - hospital bill - 5,000
It is up for Sheriff Sale ina few weeks.
Can I short the judgements and buy the
place via subject 2 (or other funding)?
Or.....can I buy the judgements at a discount
from the judgement holders, as they risk
losing all at Sheriff Sale - I would buy them
cheap, knowing that, in this area, bids
will come close to FMV- overage, once
1st mtg is paid off, will go to next judgement
holder (me if I buy them).
Main question - Is a 'lien a lien' and any lien
can foreclose, or can only a mortgage lien
holder foreclose? Reason I ask - If I buy
secondary judgements and if, by some miracle,
the homeowners pays up and make the
1st mtg current, can I foreclose as a second
lienholder (if I own the judgement) or can
only mortgage lienholders foreclose?
If you are seeking to acquire Sub2, before you lay out a nickel on junior lienholders, confirm, in writing, that you can reinstate the foreclosing first.
Negotiating settlements with junior judgment lienholders is fairly straightforward...
you can certainly attempt to settle....
Are the junior leins actually recorded? Or are they just judgements?
Guess it depends upon your jurisdiction. Generally, for a judgment against an individual to be a lien against the property, it must be recorded as such.
Hi rehabber_pa,
i don't have an answer for you unfortunately as I'm in a similar boat and wanted to add to this thread, asking for more elucidation on the subject of foreclosures and liens.
I had a guy call me who has a $79,000 lien from a real estate leasing company with whom he had a 5-year leasing contract that went awry. He was 3 months behind on $1700 payments and they kicked him out and then added the remainder of the contract to that balance, thus coming up with this much bigger number. He is 4 months behind in his mortgage payments and has about $20,000 in equity, but when he went to sell the property, literally at the closing table it was discovered that there was this huge lien and the deal fell apart. I'm really not sure what I can do for this guy. If I negotiate the lien down and pay it off, he can then sell his property to the original buyer, can't he? Where does that leave me? Does anyone have any ideas?
sspro - you said to get in writing that the foreclosure can be reinstated - who signs this assurance or issues this letter? I wasn't clear.
thanks
posherov
Another thought to add:
If the owner of the house files a Chapter 7 can he get persmission from the court to sell his property to settle with the bank and lose the protected from the lien by the BK? What happens if he makes money of the sale of the preoperty?
thanks again!
posherov
if you buy the judgments you can have the sheriff execute on the real property and sell. in some states you cannot execute on a judgement if its a primary residence. while in other states you can just as long the proceeds from the sale pay the owners homestead exemption first and then the judgement. (here in ny its $10,000). and the total liens supersede the value of the home.[ Edited by lp1 on Date 04/26/2004 ]
PA rehabber.
Yes you can buy the judgements, frequently at a substantial discount given the kind of debt they are.
Or, you could buy the first and foreclose on the judgements.
Posherov,
Your case is much harder because there really isn't that much equity to deal with here. The easiest way to deal with this is to buy the first. The seller then gives a quit-claim to a shell corp (which you own) and you foreclose on yourself. You then give the seller some cash "under the table". The lien gets wiped out in the foreclosure, but he's still stuck with the judgement.
His best bet is to go back into court and try to get the judgement modified or to go back to the judgement holder and try to get them to settle.
I have, on occasion bought such liens at very big discounts. I went in with a story about how I knew the Lienee and knew where he had hidden assets I could attach that the judgement holder would never find and got them to sell at .50 on a dollar. Its a lot of work though, for $20,000 in equity that could easily get eaten in half in legal fees.
[ Edited by commercialking on Date 04/26/2004 ]
You can negotiate a settlement on the judgements, and not even buy them. If this property goes to sale, all the Jr lienholders will be wiped out and they know this. Usually a $1 is better than nothing. If they wont settle, the threat of the borrower filing a BK usually is enough to push them to do something. A S/S may be tough b/c of the equity in the property, but who knows... its always a 50/50 unless you slant it to a 99/1
Having taken lots of J's for clients over the years, I'll guarantee they are far easier than notes to buy at discount...since most Js languish in lawyers' file cabinets & wither away eventually, totally uncollected.
Just plan your contact with the J holder carefully so you don't tip them off as to how much you want the property...and maybe it would be a better strategy to have your lawyer make that contact for you so you can buy at a real discount.