Discounting note on pre-foreclosure - Posted by Tbyrd

Posted by Michael Steele on December 30, 2005 at 09:29:52:

Your first step is to contact the loss mit department. Please keep in mind there going to be lawyer fees, court costs, and a large amount of interest that they will tack on. Most of these are negotiable if you can confirm a date of them recieving a payoff. You must also factor in the back taxes (assuming if they are not paying the mortgage they are not paying the taxes)

This price should be substantially lower that the market value or appraised value of your deal. You should then assess if its worth it to do. If so then thats your price. Those deals are hard to be creative with do to the forclosing lender won’t allow the seller to recieve any funds.

As long as financing is in place, the loss mit department should work with you.

Please contact for further details or help

Mike Steele

Discounting note on pre-foreclosure - Posted by Tbyrd

Posted by Tbyrd on December 29, 2005 at 11:22:30:

I have a question for anyone “EXPERIENCED” in this area.

A friend/investor has a deed on a pre-foreclosure subject to in SC. He has offered to partner w/me using my credit to refi before foreclosure sale. Current loan payoff =$96,000, ARV = $125-133,000. Fixup $5k.
Even with these numbers its a decent deal. But my question is, how could I go about approaching the foreclosing lender prior to refinancing/adding me to deed, and buy this non-performing debt at a discount (to increase profit)-then getting my name on deed & refinancing using simultaneous closings to pay lender for discounted note.
Has any had done anything like this?
I’m just not sure of the logistics, who to contact at the lender and what questions to ask.
I appreciate any advice anyone has to give.

Re: Discounting note on pre-foreclosure - Posted by Phil Pelletier

Posted by Phil Pelletier on December 30, 2005 at 12:03:01:

If the home is still owned by the borrower who is documented on the loan, you have to get their permission to have you speak to the lender about the loan. Once that paper is faxed in to the lender, you can recieve an official payoff for the house. That payoff notice will include back interest owed, taxes that were paid by the lender, legal fees etc.

In my opinion, you should make an offer no higher than the original payoff the day the borrower stopped paying, maybe less. If you pay everything that is owed, you are actually paying the borowwer’s mortgage payment and his taxes, and that is simply not a good way to go, unless there is SO much equity in the home that it makes sense to pay the debt to get the house.

If you want to do the borrower a favor, you can state in your offer that the loan is to be recorede as “paid as agreed” on the borrower’s credit report and not let them go after the borrower for the deficiency between your offer and what is owed.

If the home is in pre-foreclosure, you have to deal with the title holder (usually the borrower) in order to effectively complete the transaction.

Good luck. What you are doing is not for the faint of heart and can take a considerable amount of time to complete.