Realestate investing question to do with Mortgage lender in holding?
If a house has a 2nd mortgage and the house goes into default. I heard this from a "So called investor" that if you buy the note on the 2nd and the first wants to foreclose, you can catch the payments up and assume the 1st mortgage on the house. So you are assuming a loan with out qualifying for it. I don’t believe this to be true but i don’t know for sure.
It is essentially true. If you purchase the 2nd, then you now have an "interest" in the property. The primary note holder will most likely deal with you as long as you make the catch-up payment and then continue paying. However, they may also exercise their "Due On Sale" clause and call the note. Unless you are an experienced investor or have someone willing to mentor you, this is a rather risky way of making money in real estate. I am the guy that buys the first lien position notes and wipes out the seconds. Happens all the time…
February 25th, 2010 at 3:34 pm
It is essentially true. If you purchase the 2nd, then you now have an "interest" in the property. The primary note holder will most likely deal with you as long as you make the catch-up payment and then continue paying. However, they may also exercise their "Due On Sale" clause and call the note. Unless you are an experienced investor or have someone willing to mentor you, this is a rather risky way of making money in real estate. I am the guy that buys the first lien position notes and wipes out the seconds. Happens all the time…
References :
Realtor, Investor, http://www.buyhawkeye.com
February 25th, 2010 at 3:43 pm
First you would have to read the mortgage NOTE on the property you are wanting to purchase. Most Mortgage Notes are NOT assumable. Unless it is in forclosure, than you can do what is called a short sale. If the Lender is agreeable to the short sale. Do a web search on short sales. The lender would take less on the note, than what is needed to get out of the mortgage – and it would have to be a buyer, that buys the property……you can not pay the payments current and assume the mortgage. Since most are not assumable….I may be wrong, but that is what I have always heard. And I have been in the mortgage business 7 years.
References :