Incumbered in debt - Posted by Joe Hardy

Posted by Jeff (FL) on March 28, 2000 at 22:28:37:

Mr Bronchick,

I just love reading your posts. They’re concise, accurate, and to the point. My thanks to you.

Regards, Jeff (FL)

Incumbered in debt - Posted by Joe Hardy

Posted by Joe Hardy on March 28, 2000 at 21:36:36:

I live in S. California and I run across a number of people each year that have taken out 2nd and even 3rd mortgages on their homes and find themselves in too deep. These houses in most cases end up in foreclosure. I was wondering if there was some way I could benefit from these situations or is it something that should never be touched? Thanks in advance for any advice.

Joe Hardy

Re: Incumbered in debt - Posted by Joe Hardy

Posted by Joe Hardy on March 29, 2000 at 24:24:20:

Dear Mr. Bronchick:

Thank you very much for your rapid response to my inquiry. Please pardon my ignorance, but I would like to know what you mean by the debt not being current. Are you refering to forclosure or just a number of late payments?

Thank you,

Joe Hardy

Re: “Encumbered” - Posted by William Bronchick

Posted by William Bronchick on March 28, 2000 at 21:45:10:

Yes, it is very possible, if the debts are not current. In that case, you can get a quitclaim deed from the owner, then negotiate a discount on the second and third mortgages. If the first is in default, you will be very successful and negotiating deep discounts. Once you have obtained the appropriate discount (in writing), then you can pay off the entire debt and sell the property for cash, or pay off the second and third for cash and reinstate the first mortgage. This presumes the first mortgage is a good interest rate and the property is worth keeping.

Re: Incumbered in debt - Posted by Paul_NY

Posted by Paul_NY on March 29, 2000 at 04:51:35:

It means that any of the mortgages are past due. In other words, the owner has not paid on any of the mortgages and is X number of months behind.

An example of discounting a mtg:

Kathy has a 40k 1st mtg and a 20k 2nd mtg. House is worth about 55k, but the 2nd mtg was given due to her excellent credit.
When Kathy makes no payments on the 1st or 2nd for about 3 months, she is not ‘current’.
As the house went to the foreclosure auction, the bank holding the 2nd “FORGAVE” the mortgage. In other words, the bank took the loss. This 2nd could have been discounted for pennies on the dollar.

This is a real situation with Citizens Bank. I found out about the situation too late.

Hope this helps!