Buy Note on Short Sale?

[Sandy Thayer]

Why would a real estate investor want to buy the mortgage note on a home where the owner cannot make the mortgage payment? At first, the investor wanted to purchase the short sale home to repair and sell. Now, he mentions purchasing the note as a bargaining tool.

[Sam M.]

Sandy,
An investor might buy the note if the bank will sell the note at a a steeper discount than could be attained with a short sale. The bank will sometimes agree to a note assignment because it is less hassle than a short sale. The investor takes the risk of being forced to carry out a foreclosure if the homeowner will not deal. Most of the time there is an agreement in place to transfer deed if the note assignment is successful. The investor can then work out whatever he wants with the homeowner. That might be a reduction in principle and payments or it might just be to do cash for keys. It is fairly common though usually left for the bigger players.

The investor becomes the "lender" and is more likely to deal favorably with the seller than a shark...um, I mean bank.