Question: I have an interesting situation, the house I want to invest in appears to have a first and second mortgage. It appears the owners have already left. The second mortgage has already foreclosed and the 1st mortgage doesn’t go to auction until later. The bank for the second mortgage is listed as the owner of the home. How is this possible?
Also, since the first mortgage hasn’t foreclosed yet and the second mortgage has is it possible to make an offer to the first mortgage and if accepted own the property even though the 2nd is shown as owning the house on the county assesor website?
Thank you
What could have happened is the homeowner agreed to buy or investor deeded the property into a trust naming the trust after the homeowner and agreed to buy the loan from the lender for a discount. This is called an assignment, banks do it all the time. Once he owns it, he can foreclose everyone else off that is junior to him. The opening bid is the full amount of the loan, so if someone bids, he makes a nice chunk of money. If no one bids, then he’s out the initial payoff to the 2nd, and attorney fee’s for foreclosing. When the 1st forecloses, he has to make a decision either to lose his investment or bid at the auction to cover his investment. If he wins, he has to payoff the 1st. You could negotiate with the 1st to take a discount and you’d also have to negotiate with the 2nd.