Junior Liens
I havea question about junior liens - I have an attorney who can connect me with Homeowner's Associations who have foreclosed and may be interested in selling their position on the property. How does that work? If I buy out the lien from them and they deed to me, can I reinstate the first loan if it's not too far into the foreclosure process (ie sheriff's sale has already happened) or do I need to just pay it off in full during the redemption period? What would the process be and would it be beneficial (I know the situation varies, of course, depending on the balances) to buy properties this way? I am also a Realtor who specializes in condos, so I'll know right away whether there is money to be made and could just list it on the MLS but I don't want to get caught up in someone else's problems, either. Any insight?
Thanks 
Angela:
You want to get the final numbers as well as know what phase the pre-foreclosure process is in.
You did not mention if the Homeowner(Condo) is still in the picture or has abandoned the property.
This is vital if you are to successfully re-instate the mortgage. You CANNOT/SHOULD NOT if the owner doesn't consent by allowing you to 'buy' their equity' for say $10 or so.
Also, if you plan to simply buy the HOA's lien and just SIT BACK and WAIT for the Mortgage Lender or Sherrif's Sale buyer to purchase YOU MIGHT LOSE YOUR ENTIRE INVESTMENT.
HOA Fees are usually treated like a 2ND Mortgage and WIPE OUT by Sheriff's Sale. (NOTE: Consult w/Your Attorney)
If the Sherrif's Sale has yet to occur:
9And the Owner has Abandoned)
Call the bank (as the New holder of the HOA debt) ask them for the Full Face Value Amount of your HOA fees as a DISCOUNT for you Buying it.
Lock up the deal by finding a buyer...this should be easy as you can probably negotiate a purchase around 70% below Mkt
1-Lender original Note
@ (+ or -) 90%
2-Discounted Purchase of the HOA fees
@(+or -) 5-7%
3- RE Broker's Commission
@ (+ or -) 5-7% of the
If you've DONE the HOMEWORK Assuring it's a BARGAIN(even if the Sherrif's Sale has near) ask the LENDER
Angela:
I forgot to ADD:
If you've DONE the HOMEWORK Assuring it's a BARGAIN(even if the Sherrif's Sale has passed) ask the LENDER for a DISCOUNT as the holder of the HOA note.
They may even approve you for a loan or work with you to help the unload it.(as a listing)
They might be willing and you never know what you can get until you ASK!
The BIG TRICK is to LINE UP A BUYER BEFORE YOU PURCHASE THE HOA NOTE!
Much Success!
Derrick Ali
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Thanks for the info. I just recently listed one of these (as a Realtor) and the attorney mentioned I may be interested in the deal because he deals with a lot of them and said he would give me the leads. In that case, the HOA had already foreclosed and thus, were the owners. The property was vacant. However, the lender had also foreclosed (on the association) and it was in the redemption period when I listed it. The HOA was only owed about $7k (and therefore took the property for that amount) but the lender was owed $71k. The attorney for the assn tried and tried to get the bank to negotiate so we could sell it but ultimately the redemption period ended and the bank is now the owner and the assn is SOL. Obviously in this case there was no win but in the future it's intriguing if the numbers are right and the bank is willing to negotiate. At worst, I could possibly sell it as a Realtor, recover my investment and then some, and pay off the bank. Since I'm licensed, I only have to pay out 2.7% on a MLS listing. Not bad.
Does that still sound like it would work if the numbers were right? I just wanted to make sure I have the process right and am thinking right about the scenario.
Thanks
Angela:
Make a SHORT SALE offer to the Bank once the redemption period has expired. or
Have the owner to agree to a short sale.
If you need an ALL CASH partner Call me.
I do these all day!
I 'll send you my requirements via Email(which I already have from you)!
Much Success,
Derrick
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