Is It Too Late To Negotiate With The Lender?
Hi everyone,
My name is Steve and I'm new to this forum, though I'm a somewhat experienced investor.
In brief, here's my situation.
A woman who I know personally is in foreclosure. The Sheriff's Sale is scheduled for July 28, with an allowance for adjournment (as stated in the notice). The woman recently contacted me and told me she just wants OUT of the situation!
The amount of the note amount is $90k. There are no other liens/encumbrances affecting the property. The property recently appraised for $150k.
The note being foreclosed on was originated in 1990. Its a 5/1 arm with an initial rate of 12%. [And its been assigned to 6 different lenders over the past 2 years, which directly correlates with the time she has been having financial difficulties].
She agreed to sign an Option to Purchase agreement with me today and she will sign a Bargain & Sale (with convenants) tomorrow, along with an Affadivit of Title.
The Option to Purchase I intend to use has worked well in the past, as it grants me a beneficial interest in the property to negotiate my own interests, and allows me to intevene and bring all arrears current without affecting the "due on sale" clause because, again, I'm stepping-in to protect MY interests, which were granted in exchange of valuable consideration.
I would have preferred to have procured an interest in the property via a a second mortgage, but that couldn't be filed because of the lis pendens. Besides, that would allow an uncooperative lender the opportunity to ammend the foreclosure suit to include me and extinguish my interests altogether in the event they didn't want to deal with me.
I usually record a "memorandum of option" to "cloud the title" on a property pending foreclosure, but its too late for that as well. Again, the option "loosely" defines my role, and harbors fewer liabilities in my opinion.
My other concern is how the owner holds title. The woman originally purchased the property with her husband, who had passed away 7 years ago. They were married at the time of purchase, and she is listed on both the mortgage and the deed, but I've been unable to recover a copy of the note.
The lis pendens names to her late husband exclusively, but does not reference her. I would assume she owns the property via JTWROS, so I guess I should have her sign a Quit Claim deed as well.
Foreclosure proceedings prior to 1995 are protected by the Fair Foreclosure Act of 1995 in my state (New Jersey) which explicitly state that "only the debtor, not the owner must be served." By order of operation, the woman I reference should have been served as well. Or can the failure to acknowledge the deceased defendant's be a mistake attributed to the Surrogate's office? Moreover, the Act also states that "if there are two debtors, both parties must be listed, addressed and served" or the foreclosure action is in violation.
In closing, I plan to Fed-Ex the Plaintiff's attorney(s) on Monday with a copy of the option to purchase agreement, along with a check as "good faith," measure, contingent upon them allowing me to step in, insure the property and bring the arrears current with a balloon payment due in 6 months, via sale or refinance.
Any opinions regarding my approach: the lender's response at this stage of the game; or the situation in general would be greatly appreciated!
Thanks,
Steve
To my thinking, to 'negotiate' means to bring something of value to the table that the other side wants.
The foreclosing mortgagee will be made whole in about 2 weeks. What does your 'transaction' do for them?
Steve,
Why not just get a HardMoneyLoan for 60% of "property recently appraised for $150k."......
...and be done with the MortgageHolder??
Then, do what YOU want with the REI.
JustMyThoughts...
....as always,
GoodInvesting, Rocky
Thanks to the 2 people who responded.
As far as the first response, who presented a viewpoint from the lender's perspective in tems of what I have to offer, verses the reality that the lender will be paid off within 2 few weeks. I agree.
The second response summarized what I have already prepared to do in terms of utilizing a hard-money lender.
I just needed some reassurance on this one. Thank you for your time.
Steve