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Forums » General Foreclosure & Pre-Foreclosure Forums » Buying a 2nd mortgage at auction

Buying a 2nd mortgage at auction Subscribe to Buying a 2nd mortgage at auction

4 posts by 4 users

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Thos MN

Real Estate Investor · Duluth, Minnesota


Forum_avatar_avatar-thosmn

Icon_minipost Jun 19 '09, 01:11 AM

If I buy a second mortgage at auction, must the lender holding the first (same bank as the second) let me reinstate and take over payments on the first? I've heard this is true but don't know for sure. If so, can you provide precedents, links, references? Thank you.

Edited: 06/26/2010 at 08:39AM


Webb Sledge

Real Estate Investor · Lynchburg, Virginia


Forum_avatar_avatar-wsledge

Icon_minipost Jun 19 '09, 01:58 AM

This is a good question. Looking forward to the answer.

Edited: 06/26/2010 at 08:39AM


Greg E

· Sacramento, CA


Forum_avatar_avatar-swgprop

Icon_minipost Jun 19 '09, 04:26 AM

First of all, you don't buy the mortgage at auction, you buy the property. If you purchase the property at the foreclosure sale of the second, you'll own it subject to the existing first and it is at the discretion of the first lienholder whether they will allow reinstatement and subsequent payments. They may accept payments or they could require you to formally assume the loan or they might accelerate based on a due on sale clause.

In today's environment you'd think most lenders would gladly accept your money and hopefully that will be the case.

Edited: 06/26/2010 at 08:39AM


Daniel Bruckner

Real Estate Investor · San Clemente, California


Forum_avatar_avatar-locogringo

Icon_minipost Jun 22 '09, 01:44 PM

I am assuming you are an astute investor and that there is an inherent value in purchasing a junior lien that far outweighs any off-setting risks.

Since they are both owned by the same lender, why not pursue the senior lien and offer to purchase their non-performing 1st at a discount? This is the avenue I would explore unless there is considerable equity by purchasing the 2nd.

As the new owner on the property (if you do purchase the property at auction), you have the ability to bring the 1st current, acquire the first at a discount, work a short sale on the first, and/or bring all your relatives to the property, hold hands so that the property is surounded by all of you and then do a "home-buying chant" to dispel the eveil lender spirits.

Actually, doing a short would be a new idea to me as you are now technically the owner on record and it may be an uphill battle with teh asset manager/loss mitigator as their premise is that they won't allow a short sale on your own property. uHum...
Keep us posted. I'd like to hear what you choose.

Edited: 06/26/2010 at 08:42AM by Daniel Bruckner


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