Parents battling foreclosure for years
My parents built a home in 1999. It's appraised at 430k. They have been battling foreclosure for well over 5 years. Just barely scrapping by to keep the loan current the best they possibly can.
They owe $141k on the first mortgage. They owe $218k on 2nd mortgage. They also likely owe $18k in past due amounts for the 2nd mortgage. We have called and they are mailing confirmation of past due.
I would like to purchase this home for between $330-360k. This would pay off 1st mortgage in full and pay of between 190-220k on the 2nd mortgage. Is it possible to negotiate some sort of settlement with their 2nd mortgage to accept less than the total amount due?
1st mortgage is current. 2nd mortgage they recently did a loan modification program. They must now make 3 payments of interest only payments of $495.60 to continue on this program.
Please let me know any further details you may need or any insight you can provide.
Hey Matt,
I'm no expert on refi or mortgages but I totally understand where you're coming from as my parents are drowning in their home loan obligations as well. I recommend listening to BP podcast episode 304 to overcome fear and crush any negativity. Somehow, I know you will find a way to get some leverage on the finances!
#1 Foreclosures Contributor
- Real Estate Professional
- West Palm Beach, FL
- 13,431
- Votes |
- 23,374
- Posts
#1 Foreclosures Contributor
- Real Estate Professional
- West Palm Beach, FL
You buying it for that price, or anyone else for that matter, is essentially out of the question. No bank allows a family member to be the buyer in a short sale. And any short sale offer will have to be close to market value.
Years ago, after the great settlement agreement with the big 5 banks, those banks were making mass offers of discounted pay offs on seconds. I’m sure that has all washed out by now and the chances of negotiating just a “short pay off” (without a sale) with the second mtg is incredibly thin.
#3 Managing Your Property Contributor
@Matt Morgan I'm pretty sure they can't sell it to you for less than is owed as you are related to them. If it is worth $430K, pay more than they owe on it giving them some money in their pocket to get started again and you're still getting a good deal. As they've owned the home for 20 years and owe $350K on a home now worth $430K, that isn't a lot of equity and is a large balance on the mortgage.
#2 Foreclosures Contributor
- Paradise, CA
Originally posted by @Matt Morgan:My parents built a home in 1999. It's appraised at 430k. They have been battling foreclosure for well over 5 years. Just barely scrapping by to keep the loan current the best they possibly can.
They owe $141k on the first mortgage. They owe $218k on 2nd mortgage. They also likely owe $18k in past due amounts for the 2nd mortgage. We have called and they are mailing confirmation of past due.
I would like to purchase this home for between $330-360k. This would pay off 1st mortgage in full and pay of between 190-220k on the 2nd mortgage. Is it possible to negotiate some sort of settlement with their 2nd mortgage to accept less than the total amount due?
1st mortgage is current. 2nd mortgage they recently did a loan modification program. They must now make 3 payments of interest only payments of $495.60 to continue on this program.
Please let me know any further details you may need or any insight you can provide.
Your numbers do not add up to a short sale/payoff. You just want to pay less for the home than what is owed. That's fine but there isn't anyone that's going to do it. If its a short sale, you cannot purchase at short sale without it being an arms length transaction. Telling them its arm's length, if it isn't, is a federal crime. I suppose legally you could, if you fully disclosed the non arms length nature but, no lender in business, or wanting to stay in business would do it.
At the end of the day, what you want, while it may make sense to you and your parents, just isn't a scenario that happens.
@Matt Morgan As Ron and Wayne pointed out, no lender will accept a short payoff when there's equity. You're asking for the bank for a "freebie" at their expense, which is really at everybody else's expense because the banks make up for their losses by raising fees and interest rates.
Is your parent's home large enough so that they can rent out a room to somebody? If they are struggling this much, someone paying rent can make a huge difference. Or, if they can downsize to a smaller place, they can rent out their current home at full value.
This is so easy. If they have such a hard time to the point where they end up in foreclosure on the 1st mortgage, it would make it very very easy to negotiate the 2nd mortgage. They will settle for around 20 cents on the dollar. They should accept a settlement of around 40-50K more or less.
#1 All Forums Contributor
- Investor
- Virginia
Quote from @Matt Morgan:
My parents built a home in 1999. It's appraised at 430k. They have been battling foreclosure for well over 5 years. Just barely scrapping by to keep the loan current the best they possibly can.
They owe $141k on the first mortgage. They owe $218k on 2nd mortgage. They also likely owe $18k in past due amounts for the 2nd mortgage. We have called and they are mailing confirmation of past due.
I would like to purchase this home for between $330-360k. This would pay off 1st mortgage in full and pay of between 190-220k on the 2nd mortgage. Is it possible to negotiate some sort of settlement with their 2nd mortgage to accept less than the total amount due?
1st mortgage is current. 2nd mortgage they recently did a loan modification program. They must now make 3 payments of interest only payments of $495.60 to continue on this program.
Please let me know any further details you may need or any insight you can provide.
You did not state what the home is worth today? Assuming it is worth more than $430k, the 2nd lender will not be in any hurry to negotiate. They will know what is owed on the first and they will look at it as getting paid off in a foreclosure.
As someone who buys bad debt, we try and be real with borrowers. Unfortunately many do not want to hear the truth.
In this instance, like many we see, can your parents actually afford the home? Is these delayed payments, the stress etc. worth it? I know they have lived there 25 years, but if they cannot afford it then they really should consider selling during a hot economy and take the cash they have to buy a less expensive home or spend some time renting. This is an emotional roller coaster for borrowers, but it is something you should review with them and evaluate their finances to determine why they are behind, and if they are - can they come back on this or they just kicking the can down the road?
That is a good point about the 1st mortgage being too low to entice the 2nd to negotiate. What would I do if my circumstances were bad? Higher an excellent real estate attorney and pay him to do every trick in the book to postpone the foreclosure. When you run out of everything he can do, file a skeleton bankruptcy filing. That should buy you around 3 years' time. Then you can always quit claim the house to an LLC and repeat to postpone the foreclosure proceeding. That should reset the clock and give another 2 or 3 years. After 6 years total of holding bad debt, they might be more flexible in negotiating.
#2 Foreclosures Contributor
- Paradise, CA
Quote from @Panagis Voutsinas:
This is so easy. If they have such a hard time to the point where they end up in foreclosure on the 1st mortgage, it would make it very very easy to negotiate the 2nd mortgage. They will settle for around 20 cents on the dollar. They should accept a settlement of around 40-50K more or less.
That's a cute solution but not based on reality. Some guy jumps into a post from five years ago and, two posts later, we now have the answer?
Un-educated posts like yours put people with the need for real help, in harm's way.
#2 Foreclosures Contributor
- Paradise, CA
Quote from @Panagis Voutsinas:
That is a good point about the 1st mortgage being too low to entice the 2nd to negotiate. What would I do if my circumstances were bad? Higher an excellent real estate attorney and pay him to do every trick in the book to postpone the foreclosure. When you run out of everything he can do, file a skeleton bankruptcy filing. That should buy you around 3 years' time. Then you can always quit claim the house to an LLC and repeat to postpone the foreclosure proceeding. That should reset the clock and give another 2 or 3 years. After 6 years total of holding bad debt, they might be more flexible in negotiating.
its incredible the amount of horrible advice given on this subject, by people that don't have a clue what they are talking about. Try to play games like that and the lender just forecloses in rem. People like you are why lenders take the hardball route.
#1 All Forums Contributor
- Investor
- Virginia
That is a good point about the 1st mortgage being too low to entice the 2nd to negotiate. What would I do if my circumstances were bad? Higher an excellent real estate attorney and pay him to do every trick in the book to postpone the foreclosure. When you run out of everything he can do, file a skeleton bankruptcy filing. That should buy you around 3 years' time. Then you can always quit claim the house to an LLC and repeat to postpone the foreclosure proceeding. That should reset the clock and give another 2 or 3 years. After 6 years total of holding bad debt, they might be more flexible in negotiating.
umm no it will not buy you three years of time. If you file BK and do not properly file it, they will throw it out in a few weeks. Filing a BK will also cost them around $5k, and an attorney will also cost money. An attorney can attempt to file a TRO but again, what is their claim? They have no defense. Personally this is the worst advice anyone could ever give.
Quote from @Chris Seveney:
That is a good point about the 1st mortgage being too low to entice the 2nd to negotiate. What would I do if my circumstances were bad? Higher an excellent real estate attorney and pay him to do every trick in the book to postpone the foreclosure. When you run out of everything he can do, file a skeleton bankruptcy filing. That should buy you around 3 years' time. Then you can always quit claim the house to an LLC and repeat to postpone the foreclosure proceeding. That should reset the clock and give another 2 or 3 years. After 6 years total of holding bad debt, they might be more flexible in negotiating.
umm no it will not buy you three years of time. If you file BK and do not properly file it, they will throw it out in a few weeks. Filing a BK will also cost them around $5k, and an attorney will also cost money. An attorney can attempt to file a TRO but again, what is their claim? They have no defense. Personally this is the worst advice anyone could ever give.
I'm sorry, but what you extracted is not what I meant. Of course, a foreclosure can't be delayed with only a blank bankruptcy filing for a period of 3 years. It would allow a maybe six-month delay from what I recall. Also keep in mind I am in NYC not Virginia. Your mileage may vary.
Quote from @Ron S.:
Quote from @Panagis Voutsinas:
That is a good point about the 1st mortgage being too low to entice the 2nd to negotiate. What would I do if my circumstances were bad? Higher an excellent real estate attorney and pay him to do every trick in the book to postpone the foreclosure. When you run out of everything he can do, file a skeleton bankruptcy filing. That should buy you around 3 years' time. Then you can always quit claim the house to an LLC and repeat to postpone the foreclosure proceeding. That should reset the clock and give another 2 or 3 years. After 6 years total of holding bad debt, they might be more flexible in negotiating.
its incredible the amount of horrible advice given on this subject, by people that don't have a clue what they are talking about. Try to play games like that and the lender just forecloses in rem. People like you are why lenders take the hardball route.
Okay, keep in mind I grew up around public auctions and these kinds of deals all the time—actually, a lot worse things. This is just playing hardball. The lenders are entitled and should play hardball themselves, too. This does work in certain situations and jurisdictions. It ain't nice and does not settle things quickly, but it ain't a nice position to be in if they are in foreclosure. Instead of attacking my strategy, add value by stating what you would do.
Quote from @Ron S.:
Quote from @Panagis Voutsinas:
This is so easy. If they have such a hard time to the point where they end up in foreclosure on the 1st mortgage, it would make it very very easy to negotiate the 2nd mortgage. They will settle for around 20 cents on the dollar. They should accept a settlement of around 40-50K more or less.
That's a cute solution but not based on reality. Some guy jumps into a post from five years ago and, two posts later, we now have the answer?
Un-educated posts like yours put people with the need for real help, in harm's way.
Well, it works from my experience. If you are in the position of being foreclosed on and not having funds to settle immediately, what is the worst that could happen? They stay in their home for a couple more years? I like to let others speak, and I listen to anyone who knows how to get things done a better way. That is how I learned from others in the foreclosure business. What would be a better option in your opinion?
#2 Foreclosures Contributor
- Paradise, CA
It's manipulating the courts and no, it doesn't work. I'm not even going to validate your bogus strategies with a counter. You have two posts buddy ( I guess three now, with your failed attempt at justifying your first two ridiculous strategies). You stumbled on this forum after internet dumpster diving on some topic, looking for a way to try to legitimize yourself by spewing crap, trying to make yourself sound important.
Some people on this forum are looking for real help, not boiler room tactics like yours. Some people on this forum have real experience and real solutions, not boiler room solutions like yours.
You've been to too many get rich quick seminars at the Red Lion.
@Matt Morgan- thanks - its very unlikely that the 2nd lender will acept an offer like this . they can certianly request/ inquire if this an option . You might suggest they locate and use a real estate attorney to assist with this plan .
Quote from @Ron S.:
It's manipulating the courts and no, it doesn't work. I'm not even going to validate your bogus strategies with a counter. You have two posts buddy ( I guess three now, with your failed attempt at justifying your first two ridiculous strategies). You stumbled on this forum after internet dumpster diving on some topic, looking for a way to try to legitimize yourself by spewing crap, trying to make yourself sound important.
Some people on this forum are looking for real help, not boiler room tactics like yours. Some people on this forum have real experience and real solutions, not boiler room solutions like yours.You've been to too many get rich quick seminars at the Red Lion.
That is not accurate. I'm Just trying to help by sharing my real world experience. The most important person in this type of situation is to have a good real estate attorney no matter what strategy is chosen. Some attorneys will help and fight and other attorneys will play things by the book. Both have their places in different situations. A person should choose what they are comfortable with as well as what makes financial sense in the particular situation.
#1 All Forums Contributor
- Investor
- Virginia
Quote from @Panagis Voutsinas:
Quote from @Ron S.:
It's manipulating the courts and no, it doesn't work. I'm not even going to validate your bogus strategies with a counter. You have two posts buddy ( I guess three now, with your failed attempt at justifying your first two ridiculous strategies). You stumbled on this forum after internet dumpster diving on some topic, looking for a way to try to legitimize yourself by spewing crap, trying to make yourself sound important.
Some people on this forum are looking for real help, not boiler room tactics like yours. Some people on this forum have real experience and real solutions, not boiler room solutions like yours.You've been to too many get rich quick seminars at the Red Lion.
That is not accurate. I'm Just trying to help by sharing my real world experience. The most important person in this type of situation is to have a good real estate attorney no matter what strategy is chosen. Some attorneys will help and fight and other attorneys will play things by the book. Both have their places in different situations. A person should choose what they are comfortable with as well as what makes financial sense in the particular situation.
Yes but what you are not telling them is that attorney will cost $. And those costs are out of pocket. Not only that but the plaintiffs attorney will also be charging $300/hr which will be recoverable by the lender. Tack on late fees and accrued interest and every day it will be costing them significantly more money.
What you are telling them is "spend as much money as possible and lose all the equity in the home", well when you are spending $5k a month between both attorneys that cost will be significantly greater than the cost of their monthly mortgage payment....
Quote from @Chris Seveney:
Quote from @Panagis Voutsinas:
Quote from @Ron S.:
It's manipulating the courts and no, it doesn't work. I'm not even going to validate your bogus strategies with a counter. You have two posts buddy ( I guess three now, with your failed attempt at justifying your first two ridiculous strategies). You stumbled on this forum after internet dumpster diving on some topic, looking for a way to try to legitimize yourself by spewing crap, trying to make yourself sound important.
Some people on this forum are looking for real help, not boiler room tactics like yours. Some people on this forum have real experience and real solutions, not boiler room solutions like yours.You've been to too many get rich quick seminars at the Red Lion.
That is not accurate. I'm Just trying to help by sharing my real world experience. The most important person in this type of situation is to have a good real estate attorney no matter what strategy is chosen. Some attorneys will help and fight and other attorneys will play things by the book. Both have their places in different situations. A person should choose what they are comfortable with as well as what makes financial sense in the particular situation.
Yes but what you are not telling them is that attorney will cost $. And those costs are out of pocket. Not only that but the plaintiffs attorney will also be charging $300/hr which will be recoverable by the lender. Tack on late fees and accrued interest and every day it will be costing them significantly more money.
What you are telling them is "spend as much money as possible and lose all the equity in the home", well when you are spending $5k a month between both attorneys that cost will be significantly greater than the cost of their monthly mortgage payment....
Everyone's prices are different and everyone's situation is different.
"5K a month to respond every couple of months with a delay strategy? I have not come across a rate that high. I've paid 10-20K for 2-3 years of delay, I thought that was fair. Also keep in mind in this strategy there is no rent or mortgage payments are getting paid for the time it is in lis pendins and foreclosure. So if the property gets tied up and the owners still have a roof over their head for 3-6 years, they should have those savings of living payment free for that time. So if the debt is driven higher and the home goes to public auction and is lost then they should be able to move on to buy or rent another home. Also if they or a relative has funding they can also show up to the public auction and place bids. A referee deed will be issued and the most debts on the property will be wiped out. Of course if there is no capital to command at all because of some terrible circumstances then there is no hope for any solution and they default to being the victim of whatever circumstance is presented.
There are many different ways to handle a foreclosure situation depending on the circumstances. I'm not cancelling out any other responses here with the one I am presenting, i am just adding a potential. The competition should be on possible solutions to a tough situation as was presented in this post I came across. It is a very emotional situation for someone to have a home where they live in foreclosure.
#2 Foreclosures Contributor
- Paradise, CA
Quote from @Panagis Voutsinas:
Quote from @Chris Seveney:
Quote from @Panagis Voutsinas:
Quote from @Ron S.:
It's manipulating the courts and no, it doesn't work. I'm not even going to validate your bogus strategies with a counter. You have two posts buddy ( I guess three now, with your failed attempt at justifying your first two ridiculous strategies). You stumbled on this forum after internet dumpster diving on some topic, looking for a way to try to legitimize yourself by spewing crap, trying to make yourself sound important.
Some people on this forum are looking for real help, not boiler room tactics like yours. Some people on this forum have real experience and real solutions, not boiler room solutions like yours.You've been to too many get rich quick seminars at the Red Lion.
That is not accurate. I'm Just trying to help by sharing my real world experience. The most important person in this type of situation is to have a good real estate attorney no matter what strategy is chosen. Some attorneys will help and fight and other attorneys will play things by the book. Both have their places in different situations. A person should choose what they are comfortable with as well as what makes financial sense in the particular situation.
Yes but what you are not telling them is that attorney will cost $. And those costs are out of pocket. Not only that but the plaintiffs attorney will also be charging $300/hr which will be recoverable by the lender. Tack on late fees and accrued interest and every day it will be costing them significantly more money.
What you are telling them is "spend as much money as possible and lose all the equity in the home", well when you are spending $5k a month between both attorneys that cost will be significantly greater than the cost of their monthly mortgage payment....
Everyone's prices are different and everyone's situation is different.
"5K a month to respond every couple of months with a delay strategy? I have not come across a rate that high. I've paid 10-20K for 2-3 years of delay, I thought that was fair. Also keep in mind in this strategy there is no rent or mortgage payments are getting paid for the time it is in lis pendins and foreclosure. So if the property gets tied up and the owners still have a roof over their head for 3-6 years, they should have those savings of living payment free for that time. So if the debt is driven higher and the home goes to public auction and is lost then they should be able to move on to buy or rent another home. Also if they or a relative has funding they can also show up to the public auction and place bids. A referee deed will be issued and the most debts on the property will be wiped out. Of course if there is no capital to command at all because of some terrible circumstances then there is no hope for any solution and they default to being the victim of whatever circumstance is presented.There are many different ways to handle a foreclosure situation depending on the circumstances. I'm not cancelling out any other responses here with the one I am presenting, i am just adding a potential. The competition should be on possible solutions to a tough situation as was presented in this post I came across. It is a very emotional situation for someone to have a home where they live in foreclosure.
You keep testifying to try to make your B.S. legit. Knock yourself out.
Quote from @Ron S.:Ron, c'mon. You are obviously biased at this point. What bank are you with? hahaha
Quote from @Panagis Voutsinas:
Quote from @Chris Seveney:
Quote from @Panagis Voutsinas:
Quote from @Ron S.:
It's manipulating the courts and no, it doesn't work. I'm not even going to validate your bogus strategies with a counter. You have two posts buddy ( I guess three now, with your failed attempt at justifying your first two ridiculous strategies). You stumbled on this forum after internet dumpster diving on some topic, looking for a way to try to legitimize yourself by spewing crap, trying to make yourself sound important.
Some people on this forum are looking for real help, not boiler room tactics like yours. Some people on this forum have real experience and real solutions, not boiler room solutions like yours.You've been to too many get rich quick seminars at the Red Lion.
That is not accurate. I'm Just trying to help by sharing my real world experience. The most important person in this type of situation is to have a good real estate attorney no matter what strategy is chosen. Some attorneys will help and fight and other attorneys will play things by the book. Both have their places in different situations. A person should choose what they are comfortable with as well as what makes financial sense in the particular situation.
Yes but what you are not telling them is that attorney will cost $. And those costs are out of pocket. Not only that but the plaintiffs attorney will also be charging $300/hr which will be recoverable by the lender. Tack on late fees and accrued interest and every day it will be costing them significantly more money.
What you are telling them is "spend as much money as possible and lose all the equity in the home", well when you are spending $5k a month between both attorneys that cost will be significantly greater than the cost of their monthly mortgage payment....
Everyone's prices are different and everyone's situation is different.
"5K a month to respond every couple of months with a delay strategy? I have not come across a rate that high. I've paid 10-20K for 2-3 years of delay, I thought that was fair. Also keep in mind in this strategy there is no rent or mortgage payments are getting paid for the time it is in lis pendins and foreclosure. So if the property gets tied up and the owners still have a roof over their head for 3-6 years, they should have those savings of living payment free for that time. So if the debt is driven higher and the home goes to public auction and is lost then they should be able to move on to buy or rent another home. Also if they or a relative has funding they can also show up to the public auction and place bids. A referee deed will be issued and the most debts on the property will be wiped out. Of course if there is no capital to command at all because of some terrible circumstances then there is no hope for any solution and they default to being the victim of whatever circumstance is presented.There are many different ways to handle a foreclosure situation depending on the circumstances. I'm not cancelling out any other responses here with the one I am presenting, i am just adding a potential. The competition should be on possible solutions to a tough situation as was presented in this post I came across. It is a very emotional situation for someone to have a home where they live in foreclosure.
You keep testifying to try to make your B.S. legit. Knock yourself out.