Foreclosure Question - Second Purchased And What Is Resp For 1st?
Q: Purchase at the county court house steps in Georgia a second mortage that was being foreclosed. I am being told that the first is my responsibility since I purchased the second. I am currently not in a position to pay off the first, so what are my options? Can I start paying on the original owners 1st mortgage directly to keep it from going into foreclosure? How long can I do this and can the original owners get this property back from me if I keep it out of foreclosure by paying on their loan (this would keep me from having to refinance it and incurring all that is related to mortgage closing costs)? If I use this technique, can the original owners somehow reclaim a stake in this property without my authorization? And if the first goes into foreclosure, is it foreclosed on myself or the original owner? If I watch the paper to see if it is being foreclosed on, can I then pay off the note and the property be mine? In this case, how much can one expect to pay in additional fees related to the foreclosure process? If the first is foreclosed on, do I loose everything that I put into the second with no rights to the property, or do I have partial ownership in the property and it is now a title nightmare? I really can't afford to loose what I put into the purchase of the second mortgage. Any advise that is valid for the state of Georgia would greatly be
A: You bought a a lien on the courthouse steps without knowing the value of the 1st mortgage or having these questions answered. I'd say that you took a financial risk. I'm familiar with TX, so YMMV. The first mortgage is not your "responsibility", it's the responsiblity of the party that qualified for and signed their name to that mortgage contract. Most of the banks that I've seen do not disclose information on the mortgage to 3rd parties, even if the mortgage is in default. My understanding is that there is a right to privacy issue here. You *should* contact the bank and see if they will release the information. I've never seen a bank do it and I've never seen a bank that was willing to accept payment directly from a 3rd party, unless obligated to do so under a contract or state law. I don't think you CAN do this, unless you've got a bank that is willing to work with you. You might be able to buy the property from the bank directly after they foreclose as a REO sale (Real Estate Owned), but that isn't going to help. In regard to original owner buy-back: Look up "redemption period" in your state. It varies quite a bit. The owner would have to pay you back for your costs plus interest, at least in my state. >If I use this technique, can the original owners somehow > reclaim a stake in this property without my authorization? If the bank accepts payment from you and the original mortgageholder pays all the necessary fees within the redemption period, yes. This is probably a contributing factor to why banks don't typically accept mortgage payments from 3rd parties. Again, in order to have a right of redemption, the owner typically has to cover your costs. Unless your name is on that mortgage, you're not dinged, the original owner is in default... The bank has the superior lein, of course, and yours will be removed. Banks may not advertise the foreclosure in the paper that you're watching. You might stay in contact with the bank and pre-foreclosure tell them that you'd be interested in buying it directly. Alternately, another technique is to contact the original owner and have them partisipate in a process called "short sale" with the bank. The orginal owner can authorize release of mortgage information and provide the authority to do more *creative* things with the property.. Of course, they'll have to get something out of it... Some investors write terms of the short sale so that the bank does not list non-payment of the mortgage as a hit against the original borrower, which is enough to get some people partisipate in the process. Others are so credit screwed, that you'll have to dangle money.