Friend in foreclosure. Need advice!

Washington, District of Columbia
Foreclosures
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Friend in foreclosure. Need advice!

Jesse Baker
Member since 2022 · 5 posts · 0 votes

I noticed a foreclosure notice of an old family friend. I’d like to help them without taking their house. The have 400k of equity but can’t pay their bills. The buyout is 100k form the mortgage servicer and auction dates next week.. I could buy the property but I don’t want it.  I’d like to keep their name on the property and have them make payments over the next 5-6 years and have my interest secured by the property. Any advice would be appreciated on how to navigate this.  

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y

simple  pay off the old loan with a new loan you make to them.. do it tomorrow though so U dont let it get away from you.. I have no doubt they are being hounded hourly by wholesalers and other investors trying to buy it. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y

    simple  pay off the old loan with a new loan you make to them.. do it tomorrow though so U dont let it get away from you.. I have no doubt they are being hounded hourly by wholesalers and other investors trying to buy it. 

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  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    3y
    Quote from @Jesse Baker:

    I noticed a foreclosure notice of an old family friend. I’d like to help them without taking their house. The have 400k of equity but can’t pay their bills. The buyout is 100k form the mortgage servicer and auction dates next week.. I could buy the property but I don’t want it.  I’d like to keep their name on the property and have them make payments over the next 5-6 years and have my interest secured by the property. Any advice would be appreciated on how to navigate this.  

    It depends on what you mean by “buyout” The term normally used is “payoff” and if that is what you mean:

    If they can't pay their bills and they are $100k in arrears, how are they going to make payments to you?


    You could bring the loan current and put a lien in second place but it's risky. Now, if you mean that $100k would pay off the lender entirely, you just payoff the loan so the foreclosure goes away and they make payments to you as the lender.

    What is the total amount owed to the bank and what amount are you willing to lend to them?

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Jesse Baker

    Never mix friends and business

    They are $100k behind for a reason and worth paying the mortgage which they haven’t been able to pay then you, not good

    They would be better off filing bankruptcy which takes the $100k and spreads it over 60 months and saves you $100k

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  • Jesse Baker
    OP
    Member since 2022 · 5 posts · 0 votes
    3y

    His last statement said total payoff was 65k. Total cost to pay off the mortgage is now 100k. Chances of them paying is 50/50.  

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  • Jesse Baker
    OP
    Member since 2022 · 5 posts · 0 votes
    3y

    Friends and business is fine when it’s backed by  real estate. I’m sure they’ll default and I’ll have to foreclose anyways. But I’d like to give them a chance. 

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    3y

    @Jesse Baker

    Well, if you have the cash, pay off the loan and stop the foreclosure.  Record a new Note and mortgage.  Basically, they are refinancing with you as the lender...

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  • Rick Pozos
    Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    3y

    Sit down with them and find out what really is going on. They may have had a few issues and are doing better now. BUT now they have a bunch of payments that they are behind that they can not catch up from. Perhaps with a new loan from you they might be able to keep going. You dont know anything until you talk with them.

    I would never lend them the money KNOWING you will have to foreclose, thats horrible. Lend them the money if they are able to make the payments. If they cant make payments, purchase the property from them. 

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  • Minna Reid
    Real Estate Broker · Jacksonville FL & Middletown CT · Member since 2008 · 1k+ posts · 632 votes
    3y

    This is a great way to end up foreclosing on your friend, losing a bunch of money and a friend. 

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