Does anyone have a good source for learning about buying 2nd mortgages on foreclosed properties. Also, do you need the permission of the homeowner to accomplish this?
Thanks,
Art
Why do you want to buy 2nd mortgages on properties in foreclosure? If the property is being foreclosed then the 2nd will be wiped out unless they buyout the 1st position.
If there is enough equity in the property, owning the 2nd gives you a tremendous advantage over any other bidders.
Art
No…IF there is a good amount of equity in the property, the 1st lein holder is going to ALWAYS buy back at the auction(that is if an investor doesn’t work out a deal before it gets that far)…And 71tr is right, the 2nd would have to buy out the 1st for the property. Like I said before if there is equity and it makes it to foreclosure, the 1st would probably laugh unless you(2nd lien holder) paid full FMV for the property, thus owning the 2nd in a foreclosure is a sure fire way to LOSE money!!
I think your waisting your time with this. Your efforts would be better spent, and you would make more money, in other real estate investments.
EXAMPLE:
123 Dellwood Rd is in foreclosure. The property appraises for $150k. The primary lien is for $100k and the secondary is for $50k. You purchase the note from the second lien holder for $30k, that means you have a $20k difference.
The primary forecloses and their payoff is $115k for their loan and fees/penalties. The back taxes are $3k. In foreclosure, the primary and taxes always get paid before all Jr. Lien holders.
$150k
- $115k
- $3k
$32k
Oh yeah, minus the $30k you purchased the note for. That leave $2k. Not really worth it.
If you where to short sale, the second you would get for $1,000 and the first for $50k, plus $6k in closing costs, $3k in commissions, and your left with $96k… Man, I love short sales.