Funding an Assignment of Mortgage - question

I know the technique for assignment of mortgage…

But where can i get the funds to do this and wipe out the 2nd…?

I have two options here do a short sale and have two mortgage holders take a discount - or the latter - get a discount on first and get an assignment of mortgage of the 1st and foreclose on the second…

example 200k - 1st
50K 2nd

property is worth @ 150K

im thinking of offering 130-140 on first
and foreclosing on the second to wipe out entirely…

** my question is how do i fund the 1st if i get them to agree on a discount and a mortgage assignment…? **

If i do this with traditional funds they will be in first position - and i wouldnt be able to wipe out second…
Hard Money was thought of but wouldnt they be in first also…?

any ideas are appreciate… I want to contact the lender right away…


I am somewhat confused by your post!

Normally a 1st TD holder can not change when there is a 2nd TD on the property.

Either a 1st TD or 2nd TD holder can foreclose on a property, but when you say to the 2nd fine foreclose on me, they have the first right to make payments up on the first and foreclose or push the 1st into foreclosing by refusing to subordinate to a new buyer.

This forces the first to foreclose as title can not change or record if the 2nd is not in agreement.

Why as an investor would you want to pay 88 to 93% for a house? Solid Gold? Diamond encrusted door knobs?

In fact your closing cost’s are another $3k or more in this deal, what are you thinking?

Entitlements can only change if both parties agree, there is no such thing as paying the 1st and sticking the 2nd to foreclose, the second has a “Due on sale” clause that prohibits a party from changing title on an underlying loan without the 2nd being paid in full.

Go find another property, they are a dime a dozen in the country right now and if your buying short sales you should be buying at about 20 to 25% below FMV or 112,500 to 120,000 on a 150,000 FMV minus any repairs or defered maintence.

Most 2ND TD lenders can sit for years with a non-performing mortgage and wait out the property owner knowing that when a transfer or sale occurs they are entitled to there note and interest and penalties.

Good Luck,


Dont think you understood the question…

The question is how to fund the assignment of mortgage…

I would purchase the 1st for a discount @ 60% of fmv - so a 200k loan would be like 120k or so… of course starting lower…

Then I would own the first and FC on the 2nd… this would wip out the 2nd place mortgage holder and if he wants to buy us out would pay us full price 200k.

Hope this helps…

Mohegan, I think the confusion comes when you say that you will buy the first at 60% of face value or remaining balance. We get that, however, how will you let the second or foreclose on the second mortgage if you don’t own it. Of course, I see that you may be considering that the second will have to buy you out in order for them to foreclose. Actual, that might not be a half bad strategy. Have you considered how long that will take? What about not getting any payments until the second forecloses? You do understand that the process could take several months and perhaps years?

If i own the 1st buy having them assign the 1st to me - and fc process has already been started we would just be taking over the process from that position and im sure my attny could take that over and finish rather quickly… It would be me doing this not a corporate with red tape and delays. I would own the 1st nomatter… my question is how can it be funded to purchase the 1st mortgage in default, effectively, and inexpensively… still no answer to that yet… Not only should you be buying from homeowner facing fc, but you should at the same time be trying to buy the mortgage from lender, dont you think they would want a discount and be done with it… The second is done when i fc or can pay me off with my fees where i will profit no matter…


There is no public market to finance the trust deed in this country, how does a lender secure a trust deed without owning the trust deed?

Cash is king. You want to run with the big dog’s you gotta have cash!

There are companies who buy trust deeds but then you don’t own it and you don’t control it!

Good Luck,


I dont this you understand at all - the deed will be in the owner name - the person in preforeclosure.
I would own the mortgage in this senario. i could then either foreclose on both the homeowner and 2nd to wip out second - and then just work dee in lieu of FC on the 1st. Understand…?

I’ve enclosed in paratheses words which might be confusing to readers of your post. You are posting a question, asking others to help you unravel a riddle and yet you don’t take the time to logically present your argument, your dilemma, your question; This makes it difficult to reply. What exactly is your question? If you’d slow down a bit, check your spelling and check for typos, you’d get to your desired end result – an answer – much more quickly. Most everyone wants to help or to learn from your post, yet we must first “understand” your question.

Do you really want to do that? Are you saying you want to assume the mortgage and make payments on the note yourself? In other words that you want the bank to finance your purchase of the property (either from an assumption of the existing mortgage or through creation of a new one), but to discount the existing note to you? I’m confused by your question. Please clarify.

People working short sales are usually trying to get the lender to, 1) release the lien against the property (the mortgage), and 2) allow a discounted payoff of the note. This we do after getting the property’s title holder to agree to interest in the property (the title) to us at a given price, usually at 82%, or hopefully much less, of the BPO price.

Now, if you want to apply for a new loan with the same lender and buy this house at a discount, that might work; you’d simply make an offer to purchase the house, subject to the seller being able to produce merchantable title which requires the lienholders to discount the existing notes. If you don’t negotiate a discount on the 2nd, you could just make payments for the borrower keeping the existing loan intact with the expectation that they would not call the note due (because they are now just happy to be receiving payments again), but you would certainly want to obtain a large discount on the first lien holder’s note.

This is where you lose me; how could YOU foreclose on the 2nd? The 2nd would foreclose on YOU, but only if you didn’t make the payments.


Please let me clarify… I would in this scenario be buying the mortgage from 1st mtg holder ( in which they would assign the mtg to us , as done everyday ) at a Discount and and proceeding with the existing fc procedure of course with my attny now to eliminate the second which would have two choices to pay off the 1st which i would own and whatever fees i create in arrears, late fees, etc… for full amount of course or loose his 2nd position mtg to first. I hope this clarifies this process. you do understand 1st and second position mtgs… If you hold paper in second position and 1st doesnt get paid or decides to FC they only have 2 choices. Fight or Flight. :banghead2


If you want to buy the Note and Deed of Trust you have to have your own cash!!!

If I loan you $150k my collateral is the note!!!

Therefore I own the note as an investor, Not You!!!

You can not get cash for real estate without collateral? ? ?

If you want money from an investor that you do not have, for a Note and Deed of Trust the Note and Deed of Trust is mine if I put the money up!!!

So you can only purchase and foreclose on a Note and Deed of Trust that you buy with cash from your savings account, your check book, your credit cards, your family or your assets!

It’s as simple as that!

Or you could cross colaterolize the deal by giving someone a $250k property owned free and clear for a $150k loan!!!

I don’t know exactly what your thinking but I don’t think you factored in your cost’s of cash on cash, nor have you figured your cost’s or whether you can legally do exactly what your thinking of doing?

What are the securities and banking laws in your state reguarding real estate? Was this TD originated by a public lender IE a state mandated bank, a FHA / VA loan or a publicly traded mortgage lender?

Those are your choices!!!

You have a few things to think about?