1st is foreclosing, 2nd is w/IndyMac

Real Estate Investor · Huntington Beach, CA · Member since 2010 · 23 posts · 1 vote

I'm going to approach the owner to purchase a foreclosing home, subject to lender approval of a short sale on the 2nd and 3rd. Indy has the 2nd and WaMu the 3rd. What can you tell me about these lenders? Auction is in Nov....so I'll be working both ends.

Thanks!

0 Reply

15 views

Most Popular Reply

Joel OwensBusiness Member

Moderator

Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

15y

Wamu got bought out by Chase a long time ago so you will be dealing with Chase or their servicing company.

Indy Mac isn't too bad to deal with.

I see your in California where short sales can take over a year to happen !

Be cautious of not locking yourself into a short sale contract for too long.The key will be if your are is trending down in value or is starting to go up.If you submit a short sale offer and it takes 5 months to close and values have fallen 8% percent since then your deal isn't as great anymore.

This is why I like REO better. How do you know there is just a 2nd and a 3rd??

Often times the sellers do not even know what is attached to their titles.So I would do a pre-lim title search at the courthouse to see all the junk you will have to negotiate before taking it on.

Podcast Guest on Show #47

NNN Invest53 Reviews

Website View Page

1 Reply

See this reply in the discussion

13 Replies

Jump to latestLatest

Sort by

Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
15y
Wamu got bought out by Chase a long time ago so you will be dealing with Chase or their servicing company.

Indy Mac isn't too bad to deal with.

I see your in California where short sales can take over a year to happen !

Be cautious of not locking yourself into a short sale contract for too long.The key will be if your are is trending down in value or is starting to go up.If you submit a short sale offer and it takes 5 months to close and values have fallen 8% percent since then your deal isn't as great anymore.

This is why I like REO better. How do you know there is just a 2nd and a 3rd??

Often times the sellers do not even know what is attached to their titles.So I would do a pre-lim title search at the courthouse to see all the junk you will have to negotiate before taking it on.
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
1 Reply
Charlene Rakhshani
OP
Real Estate Investor · Huntington Beach, CA · Member since 2010 · 23 posts · 1 vote
15y
Hi Joel,

Thanks...I have the chain of title and it's foreclosing. I was thinking of other options, all the while planning to bid at the auction. If I bought it subject to short sale approval, it may not be approved prior to the auction...so I'm keeping my eyes on both. Any suggestions? BTW, some SS's are moving along much quicker here. This property is in my local market and it's in a good area.
0 Reply
Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
15y
Is the auction reserve or no reserve??

If a reserve even if you are the winning bid the bank can still counter your winning bid or just decline it.

Okay let me back up.When you mean auction do you mean an auction house like REDC,Williams and Williams or are you talking about the bank foreclosing on the courthouse steps to sell for cash??

People use the auction word loosely but it has different meanings.

Is the seller of the home an owner occupied or an investor?? The type of loans will determine how hard the short sale will be.

If it's foreclosing I would just bid at the steps rather than going through a big mess on the short sale.The first will bid principal balance plus attorneys fees,late mortgage payments,etc.

If that amount is higher than you want to pay then nobody will most likely bid and the bank will take back REO.You can call the attorney and ask what the starting bid will be before even wasting time going to the courthouse steps.

good luck
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
0 Reply
Charlene Rakhshani
OP
Real Estate Investor · Huntington Beach, CA · Member since 2010 · 23 posts · 1 vote
15y
Joel....it's a foreclosure auction and the opening bid includes the note plus fees. I decided not to pursue the short sale with the homeowner, but to go to the auction and bid. I went thru' all the liens on record with the title company, but I still want to make sure the 1st is the 1st (which is what is being foreclosed). I believe what I need to find is the doc that shows a clear title transferring ownership from the previous owner to the current owner. No surprises at the auction :)
Thanks for any input you have. It's very helpful to me!
0 Reply
Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Originally posted by Charlene Rakhshani:
... I believe what I need to find is the doc that shows a clear title transferring ownership from the previous owner to the current owner. ...

IMO, there is no such doc as you describe here. You will see a deed conveying the property from old owner to new owner, with whatever warranty is stated in the deed. Title insurance can be issued with exceptions, so that pre-existing encumbrances are permitted to remain unsatisfied - this is referred to as taking the property "subject to" the existing liens.

What you want to do is search for all liens of record, and search for a satisfaction piece or a lien release that corresponds to each lien; that tells you that the lien in question is no longer an encumbrance. And there is something called a subordiantion agreement which is used to change lien priorities, so that a lien that is recorded first in time can actually become second in line at foreclosure ...
0 Reply
Charlene Rakhshani
OP
Real Estate Investor · Huntington Beach, CA · Member since 2010 · 23 posts · 1 vote
15y
Thanks, Steve. Your post was helpful. :)
0 Reply
Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
15y
If you win the bid what do you plan to do with the property??

The reason I ask is if property taxes and HOA fees are involved those survive the foreclosure process.

Also many investors overlook the fact of IRS tax liens.These can pop up for back taxes owed by the previous owner.The IRS has 120 days after the foreclosure to claim the property.

They rarely do but some investors have made the mistake of renovating the property before the 120 period and then the IRS takes back.

The IRS if they claim the property is only required to give you what you paid for it and NOT cover the improvements you have completed to the property.So some investors in this case will just rent it out until the lien time line right expire.

Here at the courthouse steps about 90 percent of the time the property is underwater and the bank takes back.Very few properties get bid on.
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
0 Reply
Charlene Rakhshani
OP
Real Estate Investor · Huntington Beach, CA · Member since 2010 · 23 posts · 1 vote
15y
Joel,

It's a SFH, and I plan to do light rehab and sell to an end buyer. There are no IRS liens that show up on Title and property taxes have been paid through '09. If an IRS lien is on the property that didn't appear on Title, I will rent for the 4 month period, or call the IRS and ask for a release, perhaps. Has this happened to you? Do you hold for 120 days or get a release?
0 Reply
Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
In my area, IRS liens show up as judgments against the person owing the back taxes to the IRS - they aren't found "on title" in the public record as a mortgage lien would be.

Regarding IRS right of redemption, most will advise you to "let sleeping dogs lie" - if the IRS isn't on the case, the 120 days goes by pretty quickly. Joel was correct in limiting the improvements; in fact, by doing any improvements, you end up increasing the value of the property - and that gives the IRS more incentive to redeem. I tend to just avoid properties with an IRS lien unles the spread between my buy and sell has enough room to cover the debt owed; but I know others are not as strict about that.

If it were a short sale situation, then you would try to get a release on the IRS lien or otherwise pass on the deal.
0 Reply
Charlene Rakhshani
OP
Real Estate Investor · Huntington Beach, CA · Member since 2010 · 23 posts · 1 vote
15y
Steve, do you check for judgments on properties you're buying? If so, where do you go to check for them? I went to Pacer and input the homeowner's name, to see if she filed for BK. Do you check the recorder's office the day of the sale, to see if anything else shows up? Is there a checklist on BP that someone has made, that lists the things to do prior to auction? BTW, our auction was postponed again.
0 Reply
Dale Osborn
Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
15y
Have you discovered that Indymac was closed by the FDIC yet?? Their stuff has been purchased by other institutions.
0 Reply
Charlene Rakhshani
OP
Real Estate Investor · Huntington Beach, CA · Member since 2010 · 23 posts · 1 vote
15y
Yes, just can't remember who to. Do you know? I know WaMu >Chase and Countrywide>BofA. I'm just referring to the original TD...which at that time was IndyMac.
0 Reply
Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
15y
With the FDIC they could let another bank take over Indy Macs assets or they could have sold all the notes off in a bulk sale.

You will have to dig at the FDIC site to see what happened.

If the owner is contemplating filing BK the property can be tied up for a very long time.Once they file BK they breathe a sigh of relief.It's when the BK is about to get a relief from stay that they want to play ball again.

Watch this property but don't get to invested in it.You can never control what happens to a property or what the seller will do so you have to line up many targets for acquisition.

Some you will blow off right away,others you will follow and possibly put under contract but won't work out,and then others you will buy.
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.