Weird Forclosure Situation, need help

[Mary Spalding]

Hi All,
I answered an ad on Craigslist. The gentleman on the phone is in Chicago, we are in the Pacific Northwest.

He is a 3rd in line leinholder on the home here in my town. Apparently the owner took out a private 3rd mortgage (30k)with this guy, which he has not paid. The guy said that he served him a notice of default.

He also said he owes a 1rst mortgage with Chase of 102k and a 2nd mortgage with Beneficial that he owes 5k on.

The homeowner is still in the house and Chase has not forclosed on it.
The 3rd leinholder is trying to get the homeowner to sell and needs someone to help him.

The house is worth in the neighborhood of 190k. He gave me the address and all of the homeowners phone numbers. I am going to knock on his door at lunchtime. Do any of you have suggestions on what to say? Is it worth checking into?

I would appreciate any feedback or guidance.

Thanks much,
Mary

[Aaron Mazzrillo]

I don't know the laws in the state where you live, but here in CA, if the 3rd forecloses it has no affect on the 1st or 2nd. They may or may not file their own foreclosure. Regardless, they are senior liens and whomever buys the property at the foreclosure sale buys it subject to their existing lien.
There are a lot of moving parts to the following strategy, but depending on the condition of the property, if it were good, I would negotiate with the 3rd to rewrite the loan and put it as a second with the property being the only recourse, pay off the second, then take the property over subject to the 1st (if it is a 30 year fixed). Then, I would ask the former owner if he would like to move out on his own or meet the judge. You'd have a nice rental with very favorable terms.