Here is the deal. I am interested in a property in Will County, Illinois. The owner filed chapter 7 bankruptcy. He gave the property back in the bk. I finally got ahold of the bank that has the delinquent mortgage. They said that he still owns the property and that it is going through foreclosure. He contacted his attorney and he said that I would have to get a real estate attorney to get with the banks attorneys to work out a contract. Now to my question. I know that there is a first and second mortgage on the property. If I was to hire a lawyer and purchase the property would I have to pay the first and second mortgage or would I just be paying off the first mortgage? Please help me before I spend the money on the lawyer.
You'll need to discuss this with the Bankruptcy Trustee.
If the homeowner 'gave' the property back to the bank, and the bank accepted the property (DIL) the bank would be the owner and the mortgage extinguished. Due to the presence of a junior lien, it isn't likely the bank would accept a DIL.
Perhaps the owner/mortgagor misspoke.
The Bankruptcy Trustee might consider allowing the sale of the property, but be advised it is the Trustee's job to realize maximum proceeds to satisfy the creditors. Your offer will have to be close to the confirmed, as-is value.
If there is little or no equity, the Trustee may abandon its interest in the property allowing the foreclosure to proceed. If this happens, you may be able to present a 'short sale' proposal to the mortgaees... in which case the second mortgagee would be more at risk of loss and more likely to consider accepting less than due.
The Trustee will be able to guide you.
Do you know about how much it would cost me to get a lawyer to figure these things out? I just do not want to waste the lawyer and my time and money if it is not going to be worth it. I do know that the foreclosure is in the last stages. The former owner included the property in the bk but he did not sign over the deed to the property.
Lawyers charge at least $150 per hour, and will probably generate a lot of unnecessary letters, phone calls, etc. The lawyer would need authorization from the homeowner, etc., and I can see a conflict arising. I'm not certain you need to hire a lawyer to do this for you... but, it's your money.
I was in your shoes, maybe 30 years ago. I went to our family lawyer for some help structuring a deal... and before you knew it, I was out, and he was in. He snatched my deal.
There isn't much incentive for the homeowner at this point. What's in it for him?