How do I protect myself /buying a loan in default - Posted by Kathy

Posted by Juan on July 10, 2002 at 21:39:56:


Is this true in every state? I know of many investors who purchase these mortgages and proceed with the foreclosure with out any recourse from the homeowner. Are these investors simply assuming that this is just part of the risk?

I look forward to your response.


How do I protect myself /buying a loan in default - Posted by Kathy

Posted by Kathy on July 10, 2002 at 10:25:03:

I have a contract on a house that is a great deal but is getting complicated to put together. Any help or comments would be greatly appreciated.
The buyer has gone through a bankruptcy (3 years ago) and is again in default of his loan and very close to foreclosure. The principle balance is 70K, fees and arrears, etc. are 9K, and he wants 14.5 K out of the deal. The house is probably worth 125-130K.
He has already gotten the demand payoff with a letter threatening to charge him $420.52/day in interest until it’s paid off. We have a closing date of 7/31/02.
We think there are some bank errors that would change the fees by a couple thousand dollars. I’m getting the run around between customer service reps, default lawyers and collect agencies. Who should I try to contact? I have the money to pay the arrears immediately but how can I protect my money while I ensure that this sale will go through.I don’t think there are additional liens on the property but can’t say for certain until the title search is done. Any help guiding me in the right direction will greatly appreciated…Kathy

How do I protect myself /buying a loan in default - Posted by Juan

Posted by Juan on July 10, 2002 at 10:59:12:


The perdiem of 420.52 seems a bit extreme on a house of that value.

DO NOT reinstate the mortgage or put any of your money into the deal until you have the deed in your name and the title is clear.

The people you need to reach to get a proper payoff if you are buying the property will be the attorney or bank, and if you are reinstating the mortgage you need to speak to the bank. The department you need to speak to at the bank is the loss-mitigation dept. The bank will not speak to you unless you have an “authorization to release” from thr homeowner, or you have the homeowner call and ask for the figures. Make sure you are there with them when they make the call.

Good Luck, let us know how it goes,


Buying…HDC issues - Posted by John Merchant,JD

Posted by John Merchant,JD on July 10, 2002 at 16:14:13:

There is a legal problem that must be dealt with when buying a known delinquent loan…the buyer is not, cannot then be, a holder-in-due-course…so ANY, ALL legel defenses the payor might have, and that maybe have caused the payor to slow down or stop his payments, can now be asserted against any holder of the note…including you if you’re now the owner.

Here, if I were in your shoes, I’d think there was only ONE smart course open to me…go hire the best RE lawyer in that state you can find, get his/her advice on how to deal with this situation…or get ready to spend a lot more trying to collect the note if you DON’T hire the lawyer!