As a Junior lien holder, can I pay the 1st mortgage at a lower am

2 Replies

As a junior lien holder, can I negotiate with the bank on senior lien to pay it off at a lower amount? Is this a possible strategy?

You can offer them to purchase their note at a lower amount. This will be really your best strategy.  If it's in default then you should be able to get it at a discount.

You can offer them anything...getting them to accept it may be a different story. It's all about the numbers. If there is $1.00 above their debt in equity, they will usually tell you to pound sand. So many things depend like, is it commercial or single family? What is status of senior lien? What is status of your lien? What is status of borrower? What is status of collateral? What is value of collateral? What is total debt for all liens? is there any litigation active or pending? Is there a bankruptcy on the horizon or is there an active bankruptcy? etc..

Note sales work but usually only if the senior lienholder is in an under equity position or, there is something they know about the borrower or the collateral that you don't know otherwise, why would they settle with you? If they are in an under equity position, then chances are, so are you but worse than them. They aren't going to discount it beyond fair market value anyway so if they by chance do offer to discount...I'd go to the second probability, that they know something you don't and can guess what usually happens from their. They get out as whole as possible and you get what's left, which is usually screwed.

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