Rob:
My concern is that onece the mortgage has become extinguished IF there was no prior election to bring suit on the note obligation, then the note obligation may also become unenforceable. It would be best to check with a competent real estate attorney before putting up any hard earned $$ on this one. I somehow recall that YES you can sue on a note only, however you must make some sort of election to abandon the mortgaged collateral in order to pursue that form of collection.
I found a 2nd mortgage for 16K that got wiped out in foreclosure a couple years ago. The promissory note is still good, but apparently the foreclosed noteholder has done nothing with it. I did some checking and the foreclosed owner (who is still personally liable) has some other property in my county with lots of equity. I plan on buying the note cheap and then telling the the debtor that he needs to start paying me or face a lawsuit.
My question, does anyone have any tips on approaching the noteholders. I know they are going to ask me why in the world I would actually pay them $100 or so to take an assignment of the note that they wrote off along time ago.
Rob:
You should proceed cautiously here, there may be a requirement for the mortgagee to have previously elected to abandon the collateral (the mortgaged property) in order for you to continue to sue on the note obligation only. Now that the mortgage has been foreclosed out, I would make certain the note can still be collected on.
As for approaching the note holder, tell them you purchase bad paper and leave it at that. As far as they are concerned this should be found $$ to them.
Best of luck and let us know IF that note can collected on even thought the mortgage that secured it was foreclosed out a while ago?