BiggerPockets

I am currently going through the foreclosure process. I am at the very begining and was wondering if it is possible to let it go to auction and wait until it doesn't sell then offer the bank more like what it is worth. I am currently 75000 upside down and the best the bank is willing to do is give me a 6 month 5.25 intrest rate after that it adjustes back to 14.9%.

I thought this was a great story, and shows how the right people, Attorney, can give you a good ending in this messed up banking world.
The home owner was behind and close to loosing their house. Hired my attorney to try to do a loan mod. The bank was not being very cooperative in the process. The attorney changed gears and started negotiating for the non performing note on the house. Was successful in buying the note at penny's on the dollar and worked out cheaper than a loan mod, or, the going short sales price in the area. That is the first time I heard of a home owner buying their own non performing note. Turning lemons into lemon aid!
Of course I must add, this was performed but professionals, do not try this at home or you might cause great home ownership harm. And proves how scr@#$ up the system is right now.

I did not ask detailed questions into the case. But if a homeowner still has the same job, and making a decent living, his mortgage doubles, values tank and he can not refinance, which is what all the mortgage brokers said they could do when they put the home owners into the pic-a-payment loans. The home owner is banking the payments during the foreclosure process. "If the bank is not cooperating, and your payment doubles, why would you turn in partial payments, and the bank by law cannot accept payments during the foreclosure process. At the end of 6 months to a year the home owner has a decent amount of reserves. Those reserves is what he used to buy the house/note. Once again I say, the banking industry is messed up.

You are right. I heard the story from my attorney, and you learn not to ask the ins and outs of every case , when it is costing you $350 an hour for his time. What does make sense right now? The banks taking 400B, and putting it in their vaults and not helping the home owners. If anyone can explain anything going on right now, I am all ears, because new rules are being written every day.
I do not see you as a jerk or anal at all. Just a logical thinking person trying to make sense in a senseless world.

Back to the OP's question, please guys.

I have spoken with my attorney and my lender on this very subject and was informed it is not legally possible.
I was told a story in which an investor purchased a short sale property from Countrywide and his end buyer used financing through Countrywide. Countrywide, in essence, bought their own short sale and ended up filing a lawsuit. I do not have the details either and as far as I am concerned, Countrywide was willing to accept the short on one end and willing to finance someone on another, so has no ground to stand on, but that is only my opinion as Countrywide is part of the group of companies running our country, i.e. the banks.

This of course is not the same as buying your own note, but I did ask as I have an investor who is upside down on his property with a 1st and 2nd mortgage and he wanted to negotiate a short pay on the 2nd with his own cash. Attorney informed me this was not possible.
Just the same, banks look very closely at short sale transactions as they want to make sure that the homeowner is not benefiting financially from the transaction. Several people have tried to have their family members buy the short sale and then deed it back to them with a lower payment. It is fraud to the banks and sounds like fraud to me, but I am no attorney.
Perhaps our BP attorneys can chime in.

Exactly the point of the banks (I assume)

I agree Jon. On an REO, they would not have any grounds to deny it, but then again, if they were to see that the person buying the REO was the same person that they took it from, they could always reject the offer. Besides, how in the hell could anyone get financing to buy it back anyway with a foreclosure on their record? Only way would be to pay cash or find a private lender. Fat chance of that. Investors will not loan 100% of value.

I understand your point Ryan, but you bought the home, you signed the mortgage and therefore it is YOUR responsibilty to make good on your promises regarless if the home is upside down or not. This is just one example of thousands why the RE market is a mess right now. Too many people walking away from their responsibilities when they do have the ways and means to make the payments.
I know of several people who are upside down but have not lost their jobs and can afford the payments. They signed on and will keep on keeping on.