Buying Deed of Trust from a Bank - Best Practices?

2 Replies

I would like to buy a Deed of Trust from a bank. Due to the way things have played out in a foreclosure I observed, the bank no longer has the statutory right to redeem their interest in the property at question (period for subsequent redemptions has passed). The redemption period is 1 year. The lien priority on this one looks like this:

Lien A (foreclosing party)

Lien B (second in priority, third in time)

Lien C (third in priority, second in time)

C signed a subordination agreement with B at the time of B's DOT, so B is third in time but second in priority. I think that B forgot this.

I want to do the following:

1) Buy the original owner's (debtor's) interest - purchase quit claim deed for nominal amount

2) Negotiate with Bank B to purchase their DOT. Bank's period for redemption has expired, so I'm hoping that they will sell it to me for cheap, plus they might not know they have priority over C which means they will sell it for nothing.

3) Redeem the property as the owner. I will have to pay A and C's lien amounts, but I will own B's for a nominal amount.

Anyone have any thoughts on strategy for approaching Bank B? How do I bring up purchasing their interest while not bringing up that they may have higher priority than they think? Any best practices for buying individual DOT's from banks?

The bank knows Exactly what they have, they keep some pretty good records.  Why do you think they required the subordination in the first place?  Good luck, buying a particular note isn't as easy as buying a hammer off the shelf.  Is there any equity? 

There is definitely equity in the property, especially if I can acquire B for a discount. I think very conservative FMV is around $250k. If the unit is in good condition, then it is more like $275k.

A = $20k, B = $150k, C = $60k

I'm pretty sure the bank has no idea what they have. They allowed their time period for statutory redemption to expire without redeeming, which means that they are basically out of options. If they had any clue what's going on, they would have redeemed the property when they had the chance. The actual facts of this are more complicated, which is one of the reasons they probably don't know what's going on, but they are irrelevant to the point of the post so I didn't include them.

I recognize that buying a particular note isn't easy. Banks are arrogant and difficult to deal with. That's why I asked the question. Any tips on getting them to play ball?

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