Discounting A Second Mortgage On A Pre-foreclosure
Has anyone had any luck discounting a home equity line on a pre-foreclosure deal? If so, what percentage of the balance was the bank willing to accept as full payment on the loan?
Thanks!
HELOC or any second mortgages are commonly discounted to facilitate a short sale.
Though there is no hard and fast rule, the amount of discount is usually the portion of debt that is at risk.... less projected costs to recover.
I had a lady in Pre-Foreclosure the First mortgage would not move on their first postion. But because 2nd mortgage company was going to get wipe out at the Sale. I negociated the 2nd down from 27,000 to 7,000. After going back and forth. first we offered $5,000, then than they offered $10,000, then the final exceptance was $7,000. Depending how old the second is you usually can get a good discount. But you still have to deal with the first. Good Luck
Hi wagtre,
As the ShortSalePro said, there is no hard fast rule of what you can expect to discount a second or HELOC down to. Although a lot of investors think that if the first mortgage is foreclosing, that the second will get "Wiped Out"! But the real truth is that dpending on the ratio numbers, the second mortgage may have every intention of bidding at the sale to protect their investment.
With that in mind, it all comes back to the "Perceived" value of the property. If you help facilitate a soft BPO based on the repairs and or low comps that you have gathered, you will be in a stronger position for a good discount. Sometimes, 2nd mortgages can be stubborn to work with. So make sure that you have a complete proposal as to why they should accept your discount.
I just recently got a 2nd mortgage of $32,000 discounted down to a mere $1100 bucks! The funny thing is that I was prepared to pay $8,000.
No matter what you do, keep moving forward with your specialized knowledge, and when opportunities appear before you, you will be ready to help and to profit! Sometimes you will be able to get one base, and other times, you will hit Home-Runs (like above).
Best of Success!
BAMZ