Facing Foreclosure With Tax Lien
I have a friend who has a tax lien on his home and is now facing foreclosure. Investors are clamoring to get the house. It is very nice and in great condition. The outstanding 1ST AND 2ND mortgages are $130,000. The tax lien is $70,0000. He paid $155,000 about 3 years ago and the market value is about $190,000. What are his options if any?
Based on the numbers you just furnished the deal is starting out 10 grand in the hole. Unless the second and first loans could be renegotiated, or the property is worth more than the initial buy price, I would wait until it hits the auction and re-buy it there.
If you want to help your friend out, have him refinance the first to pay off the existing debts. If there isnt enough equity, then have him build an addition, add a pool, put in ceiling fans, etc etc. to increase the FMV of the house. If he is savvy he can get more equity than what it cost to add the improvements. Make sure he spends money on improving the value more so than the appearance. Also have him negotiate a payoff on the second to try and squeeze some more equity out of it.
Good Luck,
Kyle
How old it is the tax lien? Most property taxes are a small percentage of the value so to owe 70K means a lot of years.
The lender can step in and bring the taxes current. They will do this if someone tries to foreclose on the tax lien as they do not want to get wiped out. Granted the amount of the lien will have an impact.
The lender in 2nd is likely not to see much unless the current owner makes good. Hence they would be the ones who might discount as they are unlikely to be looking at any cash back otherwise.
John
Are we talking about a Federal Tax Lien? He has equity there, but the lien is killing it. The reason why the investors are looking at it is they are hoping it goes to sale. It sounds like he needs an attorney who is experienced in this area. Who is foreclosing??