Pay 1st And Foreclose 2nd And 3rd
I've done several shorts but this is a new one. Long story short---husband just passed away with no life isurance. Wife has 2 college kids and works fulltime. 1st is $125K , 2nd is $67K and the 3rd is an SBA loan taken out by the husband for $25K. House is in great shape and would sell around $200K+.
Wife told by attorney to foreclose due to lack of $$$$. I told the wife I would be glad to meet with the attorney and explain shorting the 2nd and 3rd. This has been done and we are on our way.
Question: Wife is willing to do anything even foreclosing. I told her I'm not touching the 1st because they could foreclose and sell at auction easily getting whole. Told her if the 2nd and 3rd don't short that maybe I could buyout the 1st in whole and foreclose the 2nd and 3rd???????? What does it take to foreclose these?????
My goal is to short the 2nd and 3rd but I need a backup plan. Any thoughts?
Thanks--Jim
Jim:
You are right, you could buyout the 1st at Trustee Sale. However you will be bidding against other "shark" investors who will not let you steal it. You will probably pay 70-85% at the courthouse steps.
Let her go into foreclosure and then try to offer the 2nd and 3rd $2k-$3k a piece and negotiate from there. They will get nothing if it forecloses. If you are persistent, you could make this work.
Best Riches,
Jeff Adam
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Jeff--
Thanks for responding. Isn't there a way to buy the note on the 1st and then jst let the 2nd and 3rd foreclose? I'd rather not go to auction.
What do you think? Jim
Jeff wrote, "They (juniors) will get nothing if it forecloses"
That's simply not true, Jeff. The juniors can step up to the plate and join in the foreclosure action as Plaintiff, or initiate their own foreclosure action. They can attend the auction and bid up to what they are due, or up to some price that they are willing to accept.
The idea that juniors are 'wiped away' and will get nothing at foreclosure sale may be pitched by those who sell books and host seminars... but it's misleading.
This is a business where those that are owed money simply don't shrug their shoulders and walk away... more often than not, they fight for it. If it makes sense.
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