Strange situation-defaulted note - Posted by Ben (NJ)

Posted by John Behle on March 08, 2000 at 13:13:42:

It all depends on what the bank perceives as their position. I’ve seen times when they were poorly collateralized and didn’t think so or were very well secured and still took a large discount. There is no set rule or situation.

The fact that it is the second time they would be taking the property back is BIG. They may be absolutely averse to getting this property again due to that. A deal we did a few years ago was just that. An insurance company took back a motel. Then they sold it and financed it to the new buyer. He never made a payment.

Even though they were fairly well secured they took a 50% discount and financed the purchase of their own note.

Strange situation-defaulted note - Posted by Ben (NJ)

Posted by Ben (NJ) on March 07, 2000 at 21:02:18:

I am foreclosing on a tax lien on a beautiful suburban home, worth at least $500,000. The bank holding the first mortgage for $237,000 contacts me and tells me they will redeem my superior lien and add it on to their own bank foreclosure amount, (they started foreclosing too about 3 months ago). In looking through the title report I see this will be the SECOND time in five years that this bank is taking back this property. I smell motivated seller so I ask the bank whether they would just rather assign me the note allowing me to complete my foreclosure.They immediately say yes. Now, my question is what should I offer? Any rule of thumb as to arriving at a discount for a non-performing loan? I don’t think they will knock off too much because there is so much gravy in this deal. The deal makes sense even at face value. My lien is 50,000 so with the added $237,000, I am getting a $500,000 dollar house for $287,000. Any ideas?