Need Help With Delaying / Stopping Foreclosure
Here are the details of this pre-foreclosure lead:
1)Property located in Michigan
2)Appraised last year for around $150,000, but property has gone downhill since then, so say $135,000.
3) First Mortgage Balance: $95,000 (Fanny Mae)
4) Second Mortgage Balance: $55,000
5) Auction is in 8 days
After talking with the 2nd lender, I am confident that I can get a substantial discount on the 2nd.
I spoke with the 1st lender about a possible short sale. They said that they need to see a Purchase agreement before doing anything. Then they will get an appraisal done by an appraiser, not a real estate broker. Also, they will not accept anything under 100% of the appraisal. So, I don't think a short sale is possible in this case unless the appraisal can somehow come under $95,000.
Assuming I can get the 2nd to release the lein for say $5,000 - $8,000, I would like to write up a purchase agreement for $100,000 with the seller, giving them $5,000.
I would be in for $100K + $8K = $108K.
The problem is, the 1st lender said that they probably wouldn't stop the foreclosure based on my $100K offer. Their reasoning is that by proceeding with the sale and waiting out the 6 month redemption period, they would stand to gain alot. But, there are holding costs for the banks, and they aren't in the business of owning properties, so I would think that they would want to get this non-performing loan off their books ASAP.
My questions are:
#1. If I get the deed and want to pay off the 1st mortgage prior to the sale, does the 1st morgage lender have to take the payoff? Is the 1st mortgage lender required to stop the foreclosure if the owner attempts to satisfied the debt?
#2. Can I get the deed prior to the foreclosure, wait until the auction, and redeem the property as owner after the auction ( still assuming that the 2nd will discount after the auction and that no one bids at the auction).
I also welcome your strategies for this deal.
Thanks for your help!
<IMG SRC="images/forum/smilies/icon_smile.gif"> [ Edited by Briman1 on Date 03/04/2003 ]
I know in MN if you have the deed, you can redeem the property during the redemption period, but all the junior liens stay in place. So yes, you could redeem if your state works the same as MN. Hope that helps?
Yes. If it went to auction, my strategy would be to get the deed, buy the 2nd at a discount, then redeem.
I submitted my offer to the 2nd mortgage lender, but haven't heard back from them. I am wondering if they will participate in the sale to protect their interest.
Does anyone know at what level would a 2nd mortgage need to be to make it worthwhile for the 2nd mortgage lender to participate in the foreclosure auction to protect their interest?[ Edited by Briman1 on Date 03/06/2003 ]