2nd TD holder wanting to own property

12 Replies

I bought the 2nd from the original lender. The house has sufficient equity to cover the 1st and the 2nd.

I own the 2nd and we want to take ownership subject to the 1st. and then cure the 1st refinance it. If I hold a trustee sale, then anyone can bid on the property, and we can potentially loose it to a higher bidder or have to "over pay" for it, if the bid is run up.

Is there a way to foreclose on a property w/o holding a trustee sale? I was thinking of a deed in lieu as an option, but that take the borrower cooperation.

Thanks.

@Chet Mazur you can do a deed in lieu but that wouldn't wipe out any liens with lower priority than yours.  Not sure if that is an issue.  The Borrower would have to co-operate or be incentivized. 

Does your note have a default rate in it?  Your usually best to take it to sale.  Hopefully, you bought it cheap enough where getting a full payout at sale is a pretty good plan b if someone comes to bid.  

This is a private money balloon I wanted to own and control this position. f I let it go to auction, there will go my profit potential as there is significant equity in the property.

1.5M 1st
250K 2nd

Property is work 3.5M+. So if  goes to auction, people would likely bid-up the second.

Further comm appreciated.

I'm guessing the owner feels it's worth at least that much too, so he likely wouldn't be dumb enough to do a DIL. No other way you could take ownership.  If you didn't buy the 2nd at a discount, you'll just make your interest, plus costs.

There are no Jr liens.

> 2td foreclosing? you need a reason other than just "I want".

The value of the property. There is ~1.75 in debt and the property is worth 3.5M. It is a very desirable location.

>If you didn't buy the 2nd at a discount, you'll just make your interest, plus costs

and have the right to cure, carry, payoff the 1st

Thanks all.

You only get title if you are the high bidder at your foreclosure auction(assuming you foreclose before the first does) or if the owner will do a DIL. 

Originally posted by @Jay Hinrichs :

second has a balloon correct. That is your default ?

Maybe I am misunderstanding your question?

The note is mature. The final payment was due in July-15
They breached a forbearance agreement
They still are not making payments on the note, nor have then been in contact with the lender
The note doesn't provide for a specific performing rate of X%, and a default rate of X%+penalty. 

It's a Straight note at 10.75%, which is less than my proposed costs of funds.

News to day: The property is for sale, so now there is a race between the NTS date and purchase of the property.

@Chet Mazur  Chet I grew up in Cupertino  just FYI  Hwy 280 was not built yet and Stevens creek and Hwy 9 ( now De Anza BLVD) were still gravel  :)

It sounds like with the equity in this deal and the fact Trustor ( assuming CA instrument) is not responsive that a sale may very well happen and you will get paid off .

Hopefully you bought the note for less than face value and you will make a tidy profit.

Good luck with it.

you can hit me off line if you want as well if there is any other things relating to this

A bit of a monkey wrench has been thrown in my deal. The property awoke from her Rip Van Winkle snooze, and has listed the property.

I'm debating what to do. I'm not in much of a different position, except I'll only make a margin on the 2nd and not the 1st as well.