Short Sale - Lender approach?

Question

There is a property in my local market that I have my eye on as a potential flip. The current owners are refusing to accept any offer below list as it will require the them to bring money to the table. The list price is above market value for a home in my area and is 90+ days on market. Currently, homes are under contract and pending a sale in under 30 days. My understanding is this home is heading towards a foreclose. Would it be possible to reach out to the lender directly to trigger the sale without reaching foreclosure status? Has anyone ever tried this or had success doing so?

Walter Holmes · Answer

The answer to your question is 100% NO. ..

The Borrower is the legal owner of the property until the foreclosure process is complete.

Him and ONLY him can make the desition to LIST the property , on an underwater  property it is up to the lender to approve the short-sale. so you need both to successfully acquire the property.

If there's enough equity to payoff all liens then the borrower is all you need.

David M. · Answer

@Robert Iovine

Oh, I see...

I did read about one way, but its only for very specific circumstances and this doesn't look to be it. It goes along with buying property subject to and having a good lawyer or lawyers.  Since the mortgage is in the former owner's name, you start the "stalling" because the they are foreclosing on wrong person since Title has changed hands...  Its a technique I've read about and never tried..

I'd be interested in hearing if there was a way.  But, with a property upside down, there isn't much to do.  You can't "magically" satisfy the lien.  Either somebody comes up with the cash, part or all of it is forgiven, or the foreclosure process takes place.

Really, the better approach is to convince them how the short sale is the lesser of two evils.  They are probably wiped out anyway...

Robert Iovine · Answer

@David M.

I suppose the better way of asking this is. With real estate markets super hot right now and foreclosure moratoriums reaching expirations soon, is there a buying method that could be utilized to obtain the property other than a foreclosure or short sale?

Steve Morris · Answer

No matter what you want, the bank is probably going to get their due.

You want it, you need come up with debt + penalties + fees.

David M. · Answer

@Robert Iovine

Okay.  The short sale process isn't easy or trivial, and it does NOT stop the foreclosure process.  Since you already know about short sales, are you asking for some other way?

Robert Iovine · Answer

@David M. I was thinking this could be a way to work around the foreclosure moratoriums.

The way short sales were explained to me was the seller needs to agree prior to it being brought to the lender.

If the overage could be forgiven by the lender in the offer, it would save both parties from going through the foreclosure process and would be an incentive for the seller to accept an offer.

David M. · Answer

@Robert Iovine

Not quite quite sure what you are asking...  The lender can't force the owner to sell, at least not in NJ.  You can't "force" somebody to sell --- maybe unless you are in a Godfather movie or something...

The foreclosure process is how the holder of the Note takes Title judicially as the lendee has defaulted on the payments.

It seems from your description that the loan is greater than the the market value of the property.  This is a classic short sale situation.  The short sale process would enable the sale of the house as the Note holder would be forgiving a portion of the remaining balance.  Maybe this is what you are asking about.  But, it still has to be done between the owner and the Note holder (or really debt servicer).  You can't do anything directly since there is no privity.

Good luck.