Second Foreclosing....
I have three properties where there is a first and a second (80/20). The seconds are all held by greenpoint.
Each of the mortgages for all of the properties are several months behind. We have a workout plan on the firsts, but would like to short/discount the seconds. We just got a letter from the seconds on two of the properties (I'm assuming the third is in the mail) that they are foreclosing.
The seconds are upside down on all properties.
What would be the best way to approach the second holders? Should I request a formal short sale package or would it be better to offer to buy the loans at a discount? And if so, what is the best approach to the bank asking for the assignment?
Thanks in advance for your help.
PS - the properties have tenants in them.
You say "I have three properties". Do you own these properties already? or are you attempting to buy them?
If you own them, you won't get a short sale.
If you are trying to buy them, you can contact the bank try to buy the notes, but if they are truly as far behind as you say, you may be better taking the short sale approach and laying out all the facts for them.
I think you would get a better rate on the short sale rather than discounting the note.
Seems to me you've got 2 major problems.
1)You're behind in your payments
2) You've got a negative cash flow each month.
A suggestion would be to see if you can sell one of the properties, maybe get enough out of it to get the other 2 current, perhaps even enough to pay down the mortgages so that your rent each month will make the payments on them.
How much equity do you have in them? Hopefully you can sell them for more than you owe, at least! Any chance of a rent increase in your future? Just tossing out a couple of thoughts here...
THIS is the serious downside of doing 100% financing on an investment property. It's VERY hard to do 100% and cash flow each month, unless you can get it DIRT cheap, and the way properties have been bid up here in Atlanta, that's pretty tuff to do nowadays.
Sorry - let me clarify...These are properties we are picking up. Not currently owned by us, but another owner.
We are bringing the 1st's current and taking subject 2, we would like to short or discount the seconds.
All are behind, the second holder however has sent a NOD and foreclosure warning.
Thanks
Your best bet would be to try to purchase the loans via an assignment... for cash.... before the juniors learn that the seniors are now or will soon be current... Otherwise, they'll just sit and wait.
I have a similar situation - not sure how to deal with it. An investor owns a property and wants me to help. She is 2 months behind on both mortgages (80-15 at full appraised value). Property is vacant but there is a good lease-option candidate with good $$ down. The investor doesn't want the property and has no plans to pay the mortgages. She will deed the property to me.
So the 2nd lienholder will "sell" the note? They're going to wonder why I would want to buy it, right? I can easily show why they're never going to get paid: vacant property, near-bankrupt investor, junior position, etc. Why would I - the new noteholder - think I am going to be paid?
And why is this better than just asking for a short-pay? Yes, they will wonder/ask whether the 1st is being brought current. This question would be asked in either scenario, right?