If the son-in-law quit claimed the property over to the x father-in-law then you will have to deal with him on buying the property. At this point the son-in-law has nothing to sell. He’s still on the mortgage, but he has no ownership in the property any more since he signed his interests over to the father-in-law.
You can tell the father-in-law you may be interested in buying the property but you need to know what the pay off on his second is. Once you get the exact pay off on the second then you ask for a discount to pay him off in full. Or you can see if he would be willing to let you assume the second and make payments on it. Or you can see if he would substitute the second for collateral in another property you own.
You need to contact the lender on the first and find out how much it is to bring the first current. If the first is in default then you can offer to buy the first at a nice discount from the lender. If your able to buy the first then you can foreclose on the property as the first lien holder. Now the father-in-law will have to either bring the first current with you to protect his interests or make a deal with you to get whatever he can out of the second. If you foreclosed on the first his second would be wiped out at the sheriffs sale unless he shows up to buy the property at the minimum bid which would be the face value of the first plus all your legal and court costs, plus interest and penalties owed for the back payments owed on the first.
Contact the first lien holder first to see where you stand with that. Then contact the father-in-law to see if there’s something you can work out with him on the second. You will also need the father-in-law to deed the house over to you since he’s the seller now. The son-in-law basically has nothing but the liability on the loan at this point.
I guess a lot is going to depend on how the x father-in-law gets along with his x son-in-law. The father-in-law is going to want to make sure his daughter get’s her fair share out this deal I’m assuming. In the end the son-in-law could end up with nothing since he has nothing to sell or bargain with. You could find yourself in the middle of a family feud on this one, so contact the first lien holder and see about buying the first from them if the loan is in default. That will give you control of the property by either foreclosing or getting the father-in-law to agree to some kind of favorable terms with you on the second to protect any interests he may have in it.
A guy calls and says his home is going into FC. FMV 80k, 40k loan balance with a 17k second. The second is held by his X-father in law who also holds title by Quit Claim deed. The house needs 7k in repairs. Maybe 3k in holding expences. This all comes to 67k. 80k minus 67k = 13k This appears to be a little thin, however I think the 17k second has been paid down somewhat as according to the mortgage the guy was to make payments of $181.00 per month and the second mortgage was taken out 12 years ago, but no release has been filed. Maybe the reason the father in law got a Quit Claim deed was because of non payment, I don’t know. I need a clever way to find out how much has been paid on the second to know if there is a real deal here. How should I handle this?
Contact the father-in-law and find out. He is the one you will have to deal with anyway if the son-in-law “quit Claimed” the deed over to him. He owns the house.
The only other way around the father-in-law would be to contact the lender holding the first. Then try to buy the first from the lender and then foreclose on the property. But the father-in-law could bring the loan current to protect his interests. So the best way is probably to just contact the father-in-law and find out what’s owed on his second.
You can try to get him to discount any balance owed for a full payoff or he might be willing to carry it for you by allowing you to assume it. If you have another property then you might be able to get him to take a second against that to release the second on this property. Then take over the first subject to by bringing it out of foreclosure. You will still need the father-in-law to sign over the property to you since he has title to it now.
Is there a reason you need to try to find a “clever” way to see what’s owed on the second? What’s the son-in-law trying to hide?
Thanks JB, in answering your question, I’m looking for the best way to approach the father in law to find out the balance on the second. The son in law just wants out because it’s his credit that’s in limbo. Should I use the approach of trying to buy the second at a discount or or just tell him I’m interested in purchasing the home and ask him to send me a settlement statement? I would think that if the son in law is trying to hide something it is the balance owed on the second. He would probably like me to think there is a high balance to get a better offer.