Posted by JohnBoy on April 19, 2004 at 21:44:01:
Sounds like your first mistake was making the payments to the owner. You should have set this up where your rent is paid directly to the lender and HOA to cover the payments and any excess paid to the owner. You wouldn’t be in this mess had you done this.
Based on your post, I assume the owner was behind on the payments and you found out about it at some point. Then you paid the HOA off and started escrowing the rent per your attorney. Since that time the owner couldn’t make any more payments since your were escrowing the rent. Now the property is being foreclosed on and going to auction next month. Is this correct?
What you should have probably done was send the mortgage payment to the lender out the rent money instead of escrowing it. That could have saved this from going to foreclosure. Now there is going to be more late fees and attorney fees added on as a result. It’s not your fault the owner defaulted, but a lot of this could have probably been straightened out by working something out and paying the mortgage payment directly to the lender from the rent each month.
How many payments are behind? How many months have you escrowed the rent?
What would it take to bring the loan current? How much do you have escrowed?
You can see if you can work something out with the lender to cure the default by offering to apply all the escrowed money towards the back payments. The lender might be willing to waive some of the fees or perhaps roll some of it onto the back end of the loan if you can pay enough to satisfy the lender to stop the foreclosure.
You will need to talk to them and explain everything as to how you were escrowing the rent when you found out the owner was in default of the loan. You will probably need a sign authoration form to release loan information from the owner in order for the bank to talk to you about this. The owner should be willing if you are willing to try and stop the foreclosure by offering to try and cure the default.
If it costs you more than what the total rent you owe and escrowed to cure the loan, then you can work that out by having the seller agree to deduct the additional amount from the purchase price when you go to exercise your option.
Or you could just exercise your option and pay the lender off and buy the property. Can you qualify for a loan at this time?
Was anything about your contract with the seller recorded? Were you served a foreclosure complaint? Depending on the circumstances and at what stage the foreclosure is in you may be able to answer to the complaint to stall the process for a little while. It will depend on the foreclosure laws in your state.
What does your attorney say you can do?