Pending Foreclosure - 3rd Foreclosing, Makes No Sense

Foreclosures, Short Sales, Tax Foreclosures
1

I had a call from an home owner today re: their pending foreclosure. They have a first, second (heloc), and a

third (heloc) all with different lenders.

They are current on the 1st and 2nd and it’s the the third that is foreclosing. The homeowner is panicking because

they got a trustee sale date for March 8, 2010 from the lender that is in the third position.

According to the homeowner, a recent appraisal (only 2 weeks old) shows that the property is worth $440K. I know

this is true becuase they emailed me a copy. The first is for $300K and the second for $140K, equalling $440K.

The amount owed on the third is $70K ($74K with fees etc.).

What I don’t understand is why the third is foreclosing. Are they just going through the motions or will they

actually continue with auction. If they do go to auction, the lender in third position will be liable for the

$440K (1st and 2nd). Why would they do that?

The homeowner wants to keep their home but are on the verge of filing BK becuase of enormous credit card debts.

The only option is I see is a shortsale, but I cannot figure what the lender in 3rd position is thinking.

Any thoughts?

2

They’re doing it for a reason.

Is there equity in the property?
Can you buy into the 3rd position or cure it?
Does it make sense to do this deal as an investor?

Dennis

3

First and foremost we need to know what state you are talking about.

Some States if the third forecloses first. Then the first has to buy them out to regain there position. Then if the first buys them out. The Second has to buy out the first and the second to regain there position.

So in some places you will see that seconds and thirds are filing before the first.

Does this remind you of the whole whos on first? Comedy skit?

Also I would like to know who is the Lender in 3rd position. I bet anyone here its not a major lender!