I have a friend facing foreclosure, how can I buy out his “distressed mortgage” from his bank?
Mortgage
Question by Trex005: I have a friend facing foreclosure, how can I buy out his “distressed mortgage” from his bank?
I think my intentions were not exactly clear. I know that you can buy distressed loans for significantly less than their value. I want to buy the loan just like anyone investor would, I just want to be able to specifically buy this one. I am not looking to take over the mortgage, or “rescue” from it, I just want to buy it as I think it is a good investment.
Best answer:
Answer by wizjp
go to your bank, get a loan, pay it off and get a deed for the property
What do you think? Answer below!
Tags: Bank, Distressed Mortgage, facing, Foreclosure, Good Investment, how to purchase a distressed mortgage from a bank, Mortgage, Mortgages, take over a distressed mortgage
You pay him enough so that he can pay off his mortgage, including all the unpaid interest and penalties.
Banks won’t allow a short sale to a friend or family member of the owner.
If you have the money (either cash, or through your own financing), then hire a title company to handle the transaction. They’ll make sure that everything goes smoothly and that the deed is properly transferred. Insist that they do a title search for outstanding liens on the property, even if this service costs extra. Make sure they offer a guarantee so that if anything is found later, they are liable.
Pay off his mortgage and get the Deed for the property. Then you own it. If you plan to finance the property you will have to get a loan, and that is a whole other issue if you don’t plan to live there. Financing a rental property is not the same as a primary residence. If you do buy the house and let him rent from you, have a solid written lease, and a security deposit. These deals between friends (especially friends already in financial trouble) seldom work out with happy endings.
To buy out the mortgage entirely, you would need to pay off the balance of the loan. Depending on the loan contract, you might be able to assume the loan, whereby the bank would transfer the loan to you. That would assume you qualify for the loan, and that the loan is assumable (most mortgage loans are not). If the goal is simply to stave off foreclosure, simply bringing the loan current is really the easiest option.