I’ve got a vacant rental, and one of the folks who came to look at it is a family that lives around the corner. They’re about to lose their house due to financial difficulties. Not knowing too much about buying foreclosures or any of that, I asked what their situation is. Turns out, they’re upside down with about $2500 in mortgage payments per month (rents in the area are about $1300-$1550 per month). I asked why their payments were so high, and they told me they have a 2nd on the house.
They’d like to stay in their house (as renters), and I’m looking for another property. Seems like the only way to make this work would be for the bank to take it back, then negotiate with the bank to buy it, and have this family rent from me.
But the problem is, there’s that 2nd mortgage, presumably with a different bank. What happens then? Which bank do I buy the house from? If the first mortgage holder, then who takes care of the 2nd?
Does that make sense? I’m trying to determine if this is a good opportunity, and if so, how to take advantage of it.
Hi 2bfree,
From what I understand of the process. Having a 2nd mortgage is ideal because u can generally get them to discount theirs to 10 % of the thier mortgage. The first knows there is a second an generally wants to be paid in full and prefers to thave the 2nd get paid very little. Many courses teach not to keep the homeowner there, but that is your call. You are furuther ahead of me in the game. I am still getting lists of people and intend to put into practice what I learned. Get the authorization forma dn purcahse contract so you can start talking to both banks. Other more advanced investors can answer your question.
newbie investor in florida
steve
You know. I saw a situation in Michigan where the 2nd refused a short sale. They actually forced it to go to auction. Why could a bank do that when a short sales is offered?
No clue. I think they were confident they’d get their full amount in the auction. That’s the only thing I can think of and they hinted at that. They said they were fine with foreclosure.