Buy a NOTE to aquire a PROPERTY

[Mike Rash]

I am interested in a property that is going through pre-foreclosure for the past year... Here are the FACTS:

1. Property was purchased in 2006 for 450k.
2. The owner took 3 mortgages: 1st - 350k, 2nd 100k, and 3rd - 150k.

I believe they used a 'straw' buyer and defaulted on all of the LOANS almost immediately...

The property is in a NICE location and I believe is worth about 400k now.

I have 'tracked down' the company (asset manager) that is holding the first mortgage and they want to sell the NOTE. Any advise on how to proceed? What would be the good offer price based on the numbers above?

[Steve Babiak]

I say Mike hit the nail on the head.

With multiple liens, you DO NOT want to do a deed in lieu of foreclosure as somebody suggested above. If you do so, you now have the responsiblity of dealing with those liens (basically, you get to pay them).

So, foreclosure will be the route most likely taken, unless those junior liens will discount heavily. If they don't / won't discount, then a foreclosure from the senior position will extinguish these junior liens.