I was approched by a homeowner who filed for bankruptcy, but missed again bankpayments; meaning bank is starting foreclosure all over again.? He wants me to help him to get his loan current so he can stay in the house. I can’t find a investor who is willing to lend around 10K for one year, in order to keep the house for the owner. Plus if the homeowner misses his payments again then the investor needs to come with it- I am right?
I would like to get the property on a subj2, fix it up and sell it; or flip to a rehabber. What are you’re thoughts? Also, when the property gets paid-off without going into foreclosure will homeowners credit report be cleared of the bankruptcy entity?
I was asking if and only if he is able to get his loan current, or paid off, would then his credit record be cleared of the bankruptcy entity, or will it take some time?
I on the other hand, subject to the foreclosure laws in your specific state (which does not appear in your posting), and subject to the existing loan to value (i am assuming its ok, otherwise what is there to talk about), would find this to be an attractive loan to make.
Again, depending on foreclosure laws in your state, would view the second mortgage loan as:
if it works out, great
if it does not work out, it will give you a priority position to redeem on or at least be at the “party” when the house comes available to buy, and then buy it
My understanding of your question was not if there was a second lien, I seemed to understand that there is not.
My suggestion, was that if you were to lend the person 10K as a second mortgage holder, I as a lender (expecially now seeing that there is a little equity in the deal), would view this as a good investment.
the borrower cannot again file to BK my loan, and secondly I realize that assuming the BK was a chapter 7, he has only secured creditors now and cannot “thoretically” bk me.
if he does not pay, I would be in a position to foreclose on the house and get it if he does not pay me back the 10K, or if the first goes into foreclosure I would be in line to pick up the house
aside from state foreclosure specifics, you might want to see what state lending laws allow when loaning $ to a borrower with the collateral being a homestead. In Texas, for instance, I would have to be a licensed lending entitiy in order to do this.
The owner just notifed me that he moved out. Now I am trying to get the deed as subj2, get the loan current to stop foreclosure, rehab the house and sell it, and make some $$$!
if you did let him borrow 10k… in CA you would need to record it as a “mechanics lien” that way you would protect yourself.
In CA law mechanic liens take precedent over any other lien no matter when it was recorded.
you will need to get the BK trustee to abandon the asset before you get the deed or it will not be worth the paper it’s written on.
now that he is moved out #1 doesnt apply but remember it for the future.
BK law is the same everywhere it is a federal law
you can lend noney on a property without a licence if you get your self on the deed and also make sure you add the line " that this is not YOUR homestead"
I agree. In my earlier statement I was making an assumption that the Bankruptcy has already been discharged.
You CANNOT lend to anyone who is under bankruptcy protection unless you have express permission of the court/trustee. This is probably not a worthwhile endeavor for such a small consumer transaction.
I am not clear in reading the original posting if the consumer is out of BK yet.
As far as loaning money to someone and calling it a mechanics lien, I have never heard of this, so I will be interested to investigate its validity.
There appears to be alot of misinformation going around here. I am extremely familiar w/ California real property law and you are wrong on at least two counts!
you cannot make a loan and call it a mechanics lien. A mechanics lien is reserved for parties and/or companies that are making improvements to a property. Attempting to record a mechainics lien without having the right to will invalidate your lien. Also, you very much risk a “slander of title” action against you.
While a mechanic’s lien does provide special preferential treatment as it relates to priority of liens it is not always first in priority in any way shap or form!! Anything recorded prior to the commencement of a work of improvement on the property will have priority over a valid mechanics lien. Taxes also, will have priority over a mechanics lien.
Would the filing of a ‘memorandum of understanding’ signed by all parties (to cloud title if the homeowner fails to perform under contract) bring any problems or issues to the table in your opinion?