How to determine ownership of forclosed house?

Question

I have a rental property here in Buffalo and the house across the street was recently sealed up and locked by a third party with a sign on the door saying it was ordered to protect the interests of the lender.

I'm very interested in trying to make a cash offer on the place but unsure how to determine who owns it or how to contact them?

do banks sometimes sell them outright or is this certainly going to go to auction or something like that?

This property is on a street where a nice retail sale is ~60k and a rough shape house like this could be anywhere from 5-30k for a frame of reference

Thanks in advance

Bill Gulley · Answer

Joel Owens. You only buy the note with the borrower's request to do so, before approaching the bank you set the stage, to accept a deed or to modify the loan, you don't want to just take the place of the lender and foreclose, but true, if the borrower backs out of your deal because you failed to lock it up properly, you could foreclose.

Jim Burns No, the owner sells the property, you can't hide the deal. You buy from the owner and he pays off the bank.

The "how much does he owe" pitfall. New investors get hung up here, trying to buy based on what an owner owes, it's usually a waste of time and effort. You buy based on the value to you. As you negotiate a deal, someone may tell you that that offer/price won't payoff the loan you work from there. If it's a distressed property, you just ask what is needed to clear the property. Don't waste time trying to figure out what a payoff might be.

His financing has no bearing on your valuation, he could have pledged 3 properties under one loan, sold 2 and has this left with a balance of more than he paid for it years ago.

Again, I suggest you just be straight with the owner, he knows he has problems. Tell him you own across the street, ask him what he needs and if he can sell, he could be in bankruptcy, you don't know. From there you make a plan.

Wayne Brooks · Answer

The owner stills own it. The bank can't sell it. It would have to be a short sale, with the bank's approval, assuming the mtg is above FMV

Joel Owens · Answer

Make sure there is not a bunch of back taxes owed on it that drive up the price.

Before buying the note I would want to know the foreclosure process for that state and how time consuming and costly it is.

Whether the borrower has filed BK before and how long it has been is important to know if they have the ability to stop the foreclosure or not with filing BK again even if the plan is not confirmed.

Jim Burns · Answer

Wayne Brooks Thanks for the info, I'll have to call the owner and see if he is willing to hash out a deal

Joel Owens Interesting, it definitely happened in a hurry. Now that I think about it I believe I said hi to the guy that was closing it up (not knowing that it was going on.)

I'll be asking the owner the status and looking up NYS rules on redemption rights, thanks.

Mike Neubauer and Bill Gulley, Thanks for the insight into how these things work, I have 8 units but buying one house owner financing and one on craigslist is as far as I have gone into creative lead generation.

Bill, Is there any chance that I could get a sale from either the bank or the owner and have the other party not recognize it? or is it like a normal sale where everything would be settled both owner and bank side at a closing?

I should also mention that the buyer lives in KY and is an absentee landlord. the house is currently sealed up still and I dont think he has any emotional ties to the property.

(also an interesting turn of events, he has owned the property since the early 2000s and only paid in the low 30s for it... I wonder how much he owes at this point? or how he even financed it in the first place)

Bill Gulley · Answer

Jim Burns I suggest you get with the owner. To keep it off the block you can buy it from the owner, short sale or not, you can also buy the note at the request of the borrower and have the owner give you a deed in lieu of foreclosure, perhaps with some cash for keys to motivate the owner. But then, a simple sale will also do that.

See if the borrower has given the property back, in that case there will be no foreclosure. The borrower can tell you what lender it was and the status, you can make an offer to the bank and if acceptable they can sell it if the obtained a quit claim deed. The bank may still want to list the property, so you may need to go through that broker.

I'd say, start with the owner/borrower since you have thier number.

You can go to the Recorder's office and look up the property and see who the lender is, the trustee and there should be an address for mailing, you can start there. Also, look for any other actions on the property to see who brought the action, if the name isn't there you can see the date and then search the clerk of court's office.

Mike Neubauer · Answer

No, you cannot go over the owners head. If it has not been through the foreclosure process yet, the owner still owns it and the bank has no right to sell it. If you have the owner's info, contact them directly and explain to them the benefit of doing a short sale vs. letting it go through foreclosure. I am not sure the laws in that area as I am from Chicago, but on the county recorder website you should be able to find the lis pendens filed by an attorney on behalf of the bank. You can contact that attorney office and find out where it is in the process. If the sale date is coming up you will know how long you have to wait before you can deal directly with the bank or buy it at the sale. If there is still a while for the sale date, or one hasn't been set yet, your best bet would be to track down the owner (phone, email, facebook, linkedin, skip tracing) and explain the short sale benefits. Then you can negotiate a sale price with the bank.

Joel Owens · Answer

Usually there is a provision  where in the case of abandonment the lender can secure the property. There have been times in the past when the bank has been sued for having their preservation third party company change the locks and take items from a property that is still occupied.

The key is if it has foreclosed yet and also what if any post redemption rights the state has you want to buy in.

Jim Burns · Answer

thanks for the response, I have already got the owners name and phone number from the county website. I was wondering in this case though if I need to find the bank information and go over the owners head?

David Niles · Answer

Hi Jim, I am also in the Buffalo area.

You can go to the county website to start with and if its in the city itself, you can also use the city site. You may have to additional digging if it has gone into foreclosure, but most of the city houses we deal with are still owned outright and a lot by out of state investors who got duped by some "turnkey" rental scammers.

How to determine ownership of forclosed house?

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