I am doing exactly what you are doing but with smaller numbers. I asked J Piper for some advice and he sent me an e-mail. He wanted me to do it like you are doing(reinstate the first). But in my case I had a bankruptcy and a third to deal with. I need it to go to foreclosure to wipe out the third. I decided to get the second at a discount. I then talked to a Mortgage Broker who will give me the money I need at auction to buy out the first for a fee and then he hopes that I will refinance it through him. The key was the LTV. It look’s like your first and if you can get the second even at max price would be about 81% LTV. (192.5+35)/280 Then you can go to the sale and hope someone outbids you above 227. If they do, you make the difference between the face value of your note and what you paid for it. If you wind the bid below 192+35, all you have to do is get financing for the 192K. Which should be easy at the LTV.
On your offer to the second, How old is the second? If it’s not that old your offer is insulting. With that much equity, they know that they can get a whole lot more than you are offering. If I had sent them an offe, it would have to be in the 20s somewhere. Since you are dealing with a company without a face, you need to get a face, a voice, someone to talk with. Just a thought. Maybe send it to them but leave out your price next time, if the note is pretty new. Also with that much equity in the property the second may be at the auction to do the above (bid it up to their second) to get their money back.
Need some advice. This is similar to a one of my previous posts, but conditions have changed. Here’s the current status:
House worth $280k goes to trustee sale on June 26.
1st TD is $192k ($20.5k reinstatement)
2nd TD is $35k
If I can purchase the first at $3,500, should I reinstate the first? Also, do I foreclose on the second to get the equity, or do ask for the deed and take it subject to the reinstated 1st TD? Incidently, the 1st TD holder is unwilling to sell the loan prior to sale. House is only 2 years old so it only needs new carpeting (2400 sq.ft.).
Thanks. I need to make that decision quickly. By the way, I sent the following fax to the 2nd TD (any comments on the wording?):
TO: Mr. Smith
1st National Servicing Corporation
FAX: (xxx) 211-2435
SUBJECT: Loan # 0000xxxxx
Jane Doe
547 Main St., Anywhere CA
The 1st TD is going to trustee sale on Monday,
June 26, 2000. It’s been postponed once already.
Mr. Smith has no intention of stopping the
sale. I’d like to purchase the loan and your
position for $3,500 cash to be funded by Friday,
June 23, 2000. This is contingent on
reinstatement of the 1st TD (approximately
$20,400) on behalf of the homeowner by noon,
Friday, June 23, 2000. This offer is invalid
and withdrawn if your acceptance is not received
by 1pm Thursday, June 22, 2000. Provide your
written acceptance to the fax number listed below,
including the means of payment you require.