Buying 2nd when first is going to sale - Posted by Dianna

Posted by John Merchant,JD on July 03, 2002 at 15:13:41:

Verve, what you say may well be the law as to a particular state’s statutes, but only way to know is to read them, very carefully.

But be aware, there is no such thing as ONE set of foreclosure laws or rules for every kind of mortgage or deed of trust or contract’s foreclosure or forfeiture, in every state. So look up that particular state’s foreclosure laws on one of the many law websites, and confirm what they are for your particular deal.

And even within a particular state, there may well be differences in the procedure, depending on what type of mortgage (or Deed of Trust or “land contract”) is involved in the particular case.

Here, in my state, WA State, for instance, there’s a completely different procdure for forfeiting a contract of sale, and a WA Deed of Trust…and if a secondary lien holder such as your 2d holder in this case, wanted to redeem, he might or might NOT have that right.

So the reader must read the particular state’s laws and KNOW them…before getting any money into the deal!

By the way this is not difficult legal research and even without a computer, if the reader will just stop in at his closest courthouse, and have a look at Martindale Hubbell’s Law Directory (in the courthouse law library, which is open to the public), in Volume of Law Digests, one can find any one of the 50 states and check under Foreclosures, or Forfeitures, or Deed of Trust or Mortgage, and pretty quickly have the law needed.

Buying 2nd when first is going to sale - Posted by Dianna

Posted by Dianna on July 02, 2002 at 17:49:00:

There’s a house we want, but we can’t get the owners to talk to us. The first is going on 8/9, and there is a small 2nd that is not in foreclosure.

Is there a way we can control/purchase the property by buying the 2nd (at a discount) and bringing the first current w/o the owners involvement?

The first and the 2nd together are only 65% LTV. How would you try and get the deal?


Re: Buying 2nd when first is going to sale - Posted by Richard

Posted by Richard on July 02, 2002 at 18:43:04:

If I remeber right,you buy the 2nd at a discount,but you have to bring the first current or you could get wiped out,then you forclose and take the property.the first mortgage will stay in place so you need to make those payments during forecloser,consult an Attorney on forecloser,it can be done.

Re: Buying 2nd when first is going to sale - Posted by John Merchant, JD

Posted by John Merchant, JD on July 02, 2002 at 21:55:11:

Don’t pay more than peanuts for the 2d…it’s going to be totally worthless when the 1st is foreclosed.

After you’ve made a deal to buy the 2d for a few dollars, then make contact with the lender and deal with them on buying their position. If you can. If they’ve got a big gain by foreclosing, they’ll know that too. Lenders generally know the value of their holdings. But maybe they’re for some reason motivated to dump that property, so you should certainly try to talk to them.

Depending on the State where the property is, and what exactly is being foreclosed or forfeited (this is what’s done with a defaulted RE Contract) the bank might have to take a payoff way below the value of the property, from the homeowner or anybody else who might walk in the door with cash…in which case you certainly could end up with a bargain for your money.

As the other response mentioned, a good local RE attorney could give you some good advice here.

Re: Buying 2nd when first is going to sale - Posted by Verve

Posted by Verve on July 03, 2002 at 10:44:21:

  1. Buy the 2nd at a deep discount. Start negotiations at 5 to 10 cents on the dollar.
  2. If negotiations are successful, as 2nd holder, you have right to reinstate 1st. Reinstate 1st and make it current.
  3. Add costs of reinstatement to your 2nd. Initiate your own foreclosure.
  4. Approach homeowner, make offer to accept deed in lieu of foreclosure.
  5. If homeowner accepts, you’ve made a deal for yourself. If not, and homeowner comes up with funds to reinstate 2nd, you’ve made a deal for yourself.

A friend of mine did just this and put 40K in his pocket.

Good luck…