This is what you call a Mistake !! (Long) - Posted by JT-IN
Posted by JT-IN on January 25, 2002 at 23:17:13:
Your statement: “If the junior liens will not discount I would like to buy the first at a discount and wipe the other liens off”.
Boy, I do not follow your line of thinking here… If anything, how you are looking at this matter is exactly backwards. The first will have NO motivation to discount to you. The 2nd’s lien, (the one that was not served), will survive the sale, and only the 3rd or 4th will have any motivation to speak to you about a discount. However, before you pick up the telephone to call them, what would you gain if they discounted their (talking only the 3rd and 4th lines now) postions to you by 90%? You would only serve to lose less money than they will, that’s all. These liens will likely be worthless, in the event of any sale. If you can buy the 1st and 2nd at discounts, then proceed with the 3rd and 4th… but not before.
Your other statement: “I spoke to a woman at the 2nd mortgagee company about buying the loan at a discount (she didn?t understand the concept). She said they didn?t know the first mortgagee had started foreclosure”.
Exactly why would she know anything about the foreclosure, anyway? The “Notice”, naming any lien holders as a Defendent, is for this very reason; to notify them of the court action, and give them an opportunity to defend their position. Since they have not been “Served”, they wouldn’t know about the suit, nor are the under any obligation to know. If this property sells for $ 10 bucks, or $ 100K at sale, the new owner will be taking the title with a mortgage in place… it will be the existing 2nd mtg! The 2nd lien holder has the best seat in the house! They are in no danger of losing anything at all…, in fact their security will become a 1st mtg, once the sale occurs. You can’t beat that option, if you are the 2nd mtg company, can you?
To answer your two questions futher, and more directly:
Neither one, as far as I see it. If anyone would be more negotiable as a result of this, it would be the 1st; but not by much. The 1st may or may not be an insured mtg, or have PMI in place. Do you happen to know? This could make a slight difference in their positon, but don’t hold any breath here, or the next sound you here will be either the ambulance, or the undertaker, depending upon whether you come to, or not :)))
I would, especially if you have any interest in buying this property. Whether it be Sub2, or at the auction, I would want the 2nd notifed, and nullified, if it goes to sale. Once put on notice, then this may drastically change the above answer to Q # 1 above, as to the 2nd mtg. They may well get the hint, and decide to deal seriously on a discount.
Hope all this makes sense… If not, re-post asking specific Q’s, and we will get you up to speed on this deal.
Just the way that I view things…