I am looking at purchasing a foreclosure with the previous owner still living in the house. He says he is involved in a lawsuit with his mortgage company for fraud. The bank is asking 15K and the property is valued on our county website at 100K and comps in the area are between 80K and 120K.
My questions for everyone is, do you think it is worth the hassle of going through an ejectment to purchase this property and, if this person eventually wins a lawsuit against his mortgage company, is it possible that we could have to give up the house? Any advice would be appreciated.
Unless you are highly experience I would stay away from this deal with a two foot pole!!!! There is a reason the saying two good to be true exists!
This is all about your risk profile. If you can't get a clean title, don't do the deal. And even if you are told they can deliver clean title, make sure there is title insurance in place.
Based on the limited information given, it doesn't sound like the homeowner is likely to prevail in the lawsuit. If the title is tied up in a lawsuit, I don't see how the bank could close a deal, anyway.
As to the eviction - these can be hard. It has taken people months to get people out of properties, even when they have title. One option would be voluntary removal, sometimes called cash-for-keys. Basically, you tell the person who is occupying the place that you will pay them cash in exchange for the keys to the house and their departure. This can save a lot of time, legal costs, and carrying costs, but it doesn't always work. The legal process can be lengthy, so really, as I said to start, it's all about your risk profile.
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