Hello, I have been reading through previous posts since yesterday to see if there was an answer out there before posting this but I haven't found one. Here is my situation:
I purchased a house through an HOA foreclosure sale in California. I paid 15K. I knew at the time that there was a lien by Bank of America for the mortgage owed by the previous owners. I bought the house for my daughter and I want to keep the property. The amount due on the mortgage is 560K which i am willing to pay off. However, Bank of America is assessing an additional 150K in penalties, interest and fees which I do not want to pay. I have tried to contact BofA to negotiate but they will not talk to me. They refuse to deal with me at all because I am not the borrower. I do not want to simply wait until they foreclose. I want to own the property free and clear but I don't know what to do since they will not talk to me. What can I do?
Someone suggested a short sale to me but I don't see how that would work. I own the property now subject to the BofA lien, so who exactly would short sell the property to me and most importantly, how would I even be able to do it if BofA won't talk to me?
I have contacted attorneys and they tell me that I should try to deal with the previous owners. The previous owners are willing to help if I pay them. Lol...no surprise. What I want to know is whether they can really help me at all. I don't want to pay them if they can't help. What exactly could they do for me?
Can someone please help? This is all so frustrating. I just want to be able to give the house to my daughter.
Mayra: I have done what you are trying to do. I'm not an attorney and my suggestions are not legal advice.
As a buyer subject-to the senior lien, the only thing the lender is required to do is give you the full payoff amount and provide a full accounting of what is owed (beneficiary statement). This is covered in Civil Code 2943. If you have the payoff amount and know that includes penalties and late fees, It sounds to me like the lender is cooperating with you per the code.
The lender likely will not work with you without an authorization to release from the borrower. If indeed the borrowers are willing to cooperate with you, get them to fill out an Authorization to Release Information that includes loan numbers and social security numbers and their signatures. This is worth paying them for. Of course, pay as little as possible. You can look for samples of the ATRI document online. Fax the ATRI and a copy of your deed to whatever dept. BOA tells you to. Once the ATRI is in the system at BOA, you will be able to ask about a discounted payoff and eventually get to the right department. Just tell them you are now the owner and want to pay off the loan in full, and will they accept $560K. There may be confusion because this is not a short sale, as you own the property. Just keep telling them you want settle the account with a payment in full in exchange for a lien release. You'll get to the right party eventually.
Also be aware that the lender may have no reason to discount the lien. They will most likely require a BPO or some assessment of value and will work with that number when negotiating with you. What's the condition of the property and do you know the current fair market value of the property? Where is BOA in the foreclosure process? Have they filed a notice of default? You definitely want to be aware of the time frames here.
Hope this helps.
Thank you so much K. The property is decent condition but my plan was to fix it up quite a bit. However, I don't want to start doing any work on it until I own it free and clear. On the other hand, I really want my daughter to be able to live there soon.
BofA has not started the foreclosure process. No notice of default has been recorded.
Thank you for the ATRI information. I think that makes the most sense given that the previous owners are willing to help for a price. Now I just have to find who to send all the paperwork to at BOA.
Once again, thank you.
Definitely don't start fixing it up until you know where you stand with BOA. Don't even clean it up. Seriously. If the lender sends someone out do a valuation, you need their BPO or appraisal to come in at a number that will help you negotiate a discount. Are there past due property taxes? Unless the property is in power-to-sell status and tax sale is imminent, I suggest that you do not pay off the taxes now either. I suggest leaving the property condition and title condition as-is for now.
Thank you for all your help Kristine. Truly appreciated.
I am sure that you have already handled this, but I wanted to throw in my two cents. When you approach BOA with the release, you will also want to have a pre-approval notice or some other proof (bank statements, etc) that you are able to pay the loan off. A pre-approval notice which may be only slightly higher than the $560k may help them to accept the payoff and waive the fees.
@Simon Campbell It never even occurred to me that the OP would do anything other than pay cash in order to settle the outstanding lien. The OP is not approaching the lender with a short sale. She's approaching them in order to negotiate a discounted payoff as owner. It's not a short sale, there's no escrow. IMO it would be pretty difficult to negotiate a payoff by including a pre-approval notice. If the OP doesn't have funds to negotiate a payoff, submitting a pre-approval letter is essentially a contingency. I don't think the lender will be analyzing anything other than their bottom line and agreeing to a payoff or not. If it were me (and when it has been me) I wouldn't complicate a settlement agreement with a preapproval letter. Again, just my experience.
I realize that the owner is trying to pay off the loan. My thoughts on the matter were simply showing the lender that they are stepping up to pay off a lien that was in another's name. By showing that you have cash or will obtain other financing in the amount of the existing loan only (not including the late charges and fees) may provide added stimulus to accept the payoff.
Honestly, I do not know of very many people who have $560k stuffed in their mattress - that is why assumed there was financing involved. You may get approved for $560K but not for $710. The lender has to weigh the worst of two evils - taking a loss now or taking a loss after the burden of a foreclosure.
@Simon Campbell Where I live there are plenty of people with $560K stuffed in mattresses, as well as other, safer places. I just can't believe that FL is so different. :)
Even if the OP is planning to use a lender to fund the payoff, I would still keep approval letters and/or proof of funds out of the negotiations. She's the owner, so it's refinance. The settlement agreement will include the terms of the pay off, including the time frame, so the OP would negotiate for whatever time she needs to make the payoff. She can payoff in cash and then refi. Or she can find a lender and submit her agreement/letters to escrow as part of the refi.
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