Has anyone heard of taking over a loan and the bank reduces the amount owed. Lets say $100,000 is owed on the house, and its worth $70,000. Will the bank reduce the amount owed on the house to $70,000 or current value and you take over the payment?
Is it possible? Certainly.
Is it commonly done? Not that I know.
What I have seen and this is not that common is a lender will sell the note to another bank or a note investor. The face value of the note will be discounted. What that note buyer then does is up to them. Terry Vaughan has some articles and other things where he talks about ‘paper into gold’ or note transactions.
Otherwise, what the lender will want is a short sale where they get out of the present loan by having it paid off for less than the face amount. One lender exits and another one places a loan on the property if the buyer needs a loan. The new owner does not take over the payments on the old loan though the economics sort of feel similar.
Thank you John.