preforclosure with unattractive 2nd mortgage - Posted by Darryl

Posted by Darryl on January 13, 2000 at 21:36:46:

FACTS ON SUBJECT PROPERTY: Current owner, who has already moved from property, is $1,700 (1st & 2nd mortgages combined) behind and facing foreclosure Jan. 31. The total amount owed on the house is $70K. The owner purchased the home for $55K @$585/mo and took out a 2nd mortgage for $15K @$350/mo. Now the total mo/pymt. is $935/mo. The most the house will rent for in this area is $550/mo. This situation creates a negative cash flow of $385/mo. Although the house appraises at $90K, I realize I could refinance the house and pay off the 2nd mortgage. However, if I refinance the house, for $70k, the $550/monthly rent this house would bring will only barely cover the monthly note. The owner is willing to sign over the house with a Quit Claim Deed on the condition that I bring the notes current ($1700). It seems to me that I’m in a good position to negotiate with the bank because if they do forclose, I doubt the banks will get the $70K that’s owed. The 2d mortgage holder seems to be in the worst position. In fact, I’ve already spoken to the 2nd mortgage holder and they said to me “don’t talk to the 1st/primary mortgage holder about this yet because we(2nd mortgage holder) don’t want them(1st mortgage holder) telling us what we can and can’t do about this problem.” What’s the best approach to get the banks to discount the amounts owed so I can get closer to the $55k bargain the original owner had? I’M THINKING OF AN OFFER OF $65K ON THIS HOUSE. Can anyone help?