Can I buy the note of a foreclosing home?

Question

Hello BP! Is it possible to buy a mortgage note before foreclosure? Looking at a short sale ending this month and I was curious if there was a strategy for note investing. Salt lake City.

Chad U. · Answer

If it's one of the large banks or funds, forget it.  Some smaller banks may entertain it, but will need to see that you're serious and is not an easy task getting in front of whomever is responsible for loss mitigation.

I'd suggest getting yourself educated before you go down this path though.  There are lots of books and educators out there, and here on BP.  @Martin Saenz and @Scott Carson to name a few.

Brian Ploszay · Answer

I bought lots of notes.  It is so much more complicated than buying normal real estate.  Buying standards real estate comes with title insurance.  With a note you need to know legal, title and lots of technical issues.  I bet there is a few books for sale.  And some resources on bigger pockets.  Educate yourself.  If you are a beginner in real estate, I highly suggest not doing this.

Dave Van Horn · Answer

Thanks for the shout out @Grant Rothenburger!

Like people have said @Travis Bryant , to answer your first question it's certainly possible to buy a note before foreclosure. We do it all the time.

But to reiterate everyone's point above, it's not like this specific note you're after is at a trade desk being sold. You could try to have your attorney reach out to the foreclosing attorney to attempt to buy the note, but if there's already a short sale offer your chances are slim.

That being said, purchasing notes (especially 1st position liens, like on vacant property) can be an effective strategy to acquire hard real estate.

Brett Goldsmith · Answer

If it's a large servicer probably not. If it's a smaller service then maybe.

Grant Rothenburger · Answer

@Travis Bryant

Absolutely you can. I don't know the details. @Dave Van Horn does, and I believe he has some education he can share or point you in the right direction.

Travis Bryant · Answer

Thanks everyone! This is clearly over my current abilities so I wont be pursuing anything.

Wayne Brooks · Answer

Also, a big difference between buying “available” notes as opposed to buying one specific note.  I had a large buyer/seller of notes try to obtain a few specific notes...got nowhere.

Travis Bryant · Answer

@Brian Ploszay hello and thank you. How would you recommend I get educated on this process?

Brian Ploszay · Answer

Absolutely.  One trick is to buy the note, but after the bank has already started the foreclosure process.  Some banks prefer not to take possession of properties.

Can I buy the note of a foreclosing home?

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