I am pretty sure that in order to weed out the good preforeclosures from the bad, a 50% equity minimum is the goal. I understand you’ve done some research on these properties, however there are some online articles by Joe Kaiser and a woman broker/dealer in Texas who wrote (A Quick-Flip Primer part 1 & 2); in it she explains why 50% equity is needed.
I am still a newbie at this point, but I’m studying like a madman.
#1 - SFH with FMV of around $40,000 based on comps. 1st mortgage balance is $34,400, 7 months in arrears, for a total of $6000 to cure default. leaves zero equity. Seller is going to lose the house beacause she cant come up with the $6k. She can make the payments now that she’s back on her feet, but bank will not work with here, and all penalites and fees adding up to the $6k are beyond her reach. Of course seller wants to keep the house. My only thought would be to get her authorization to talk to lender, see what they’d discount to if I purchased immediately to avoid the sale, then bring her to my mortgage broker to see if she’d qualify for a new loan
#2 - SFH, FMV of $165k based on comps. 1st is $108k, 2nd is $48k for a total of $156k. Seller can no longer afford the payments, and bank will not work with them. They want to stay as well. They’ve already filed Ch. 13. If the house goes to auction, there will be other bidders… whats a good strategy to solve the problem before then?