3 lenders owed on upcoming auction, can I close a deal prior?

Question

Research on a property coming up for foreclosure auction next month tells me there are 2 junior liens after the 1st mortgage holder who is foreclosing, What are my chances of getting a deal together and who am I dealing with in what priority?

Answer 1

If the property is coming up for auction you have to make a deal with the current owner of the property wish is the person that is staying in the property or renting it to someone.

You can make a deal with this person, by offering them some move out money, finding out how much if cost to bringing the loans current. If this person and you can make a deal, call the lender that has the person in foreclosure and ask for the auction to be extended.

If the lender is in agreement then find an escrow closing agent that will send off to the various lenders and get an official cost to bring the loans current.

You will have to pay whatever you and the current owner has agreed upon, as well as the amount it takes to bring the three (3) mortgages current. You will also have to pay any taxes that are due at the time you take possession as well as secure a hazard insurance policy. Back taxes are the responsibility of the current owner.

When you open escrow or secure a closing agent make sure they understand that you are taking title to the property subject to the existing loans.

Keep in mind any cost you will need to repair any damage as well as how long it will take to keep the property until you want to sell it unless you plan to reside in the property.

That is the only deal you may make and the person you have to make the deal with. The lenders or lenders don't own the property at this time.

I hope this has been of some use to you,good luck.

"FIGHT ON"

Answer 2

It depends on how much equity there is in the property. If the 2nd or even the 3rd lien holder thinks they can be made whole by selling the property and paying off the liens senior to them they will probably bid at the sale in an amount sufficient to payoff the senior liens.

Until the foreclosure sale is completed you must deal with each of the lien holders as they retain a legal interest in the property until their liens have been foreclosed and any redemption rights have expired.

Answer 3

You have a bit of hard work ahead of you and some time pressure but it's possible to try to get a deal together. The property is still owned by the debtor, so he /she is the only one who can sell to you, subject to the foreclosing lender's agreement.
It's usually the 1st mortgage foreclosing and this forecloses out the junior mortgages, and if they don't have rights of redemption, then they will look to the owner for the deficiency later. So it's in his/her interest as well as yours to negotiate discounted settlements.
I'd suggest after you have the agreement of the owner start with the 2nd mortgage holder, as the easier to convince, and then the 3rd; then having got their agreements put the deal before the 1st; you need to have agreement from everyone.

I can recommend reading the attached article.