December 19, 2006

What happens if the Junior Lein forecloses?

Hi Paul,

I just wanted to know what happen if the junior lien foreclose on the property.

1. Can we still offer a short sale on 2nd position?
2. Do junior survive if the property become REO?

Please reply. Thank you.

Sam

Sam,

One of the great real estate investment opportunities is doing exactly what you are suggesting and that is buying junior liens at a discount. And not just junior liens. Tax liens, judgments, mechanic liens, anything that is attached to a property can be bought at a discount.

The way to do this is one of 2 methods.

1-Dealing directly with the homeowner.
2-Dealing with the holder of the note.

When you are dealing with the homeowner you might have a little easier time.
Why? Because the homeowner has a problem that they need to solve and you can help them do that. Go and contact the homeowner and see what it is they want to accomplish. See if you can come to a meeting of the minds and help them solve their problem. If you do come to an agreement get an authorization to release loan information and contact the note holder and begin to negotiate to buy the note.

Word of Warning: Do not negotiate for a note you do not have the funds to close on.

#2-The second does not survive should the home revert to the lender in an reo situation.

Paul

Posted by greggdavis at 9:11 AM | Comments (0)