How can I take over house from Pre-foreclosure?

Question

I have been living in this house for 2 years. Originally the owner/investor had told me that if I wanted to buy the house after the first years lease he would sell to me on an RTO basis. That never materialized but I have found out that the house is now in pre-foreclosure. He owes less than five thousand back payments and about one thousand on taxes. I have been told that he plans to leave the country and is just going to let the property go. My question is....Is there anyway I can take the property over before it goes into foreclosure? I am sure since he is going just abandon the property to fore-closre anyway..he would be co-operative. I just don't know how to go about in doing anything. I would really love to have this house and not have to move since it is close to all the schools and my 3 kids are still young and going to school. Please if anyone knows how I can do this..I would greatly appreciate some help before the house goes into full fore-closure. Thank you...

Answer 1

Sounds like a dog. If you can get it on a short sale (doubtful since this guy is ready to bail) You might make some hay. Typically, you will need to purchase this home. Those terms need to be carefully considered. If the originator of the note wants all backpayments included, you will have some tough negotiaitons ahead of you. Go for it, see what pans out. You can always say no.

Answer 2

First you need to find the owner and draw up a purchase contract or get him to "Quit Claim" the property to you.  He has nothing to lose if he was going to let it go back to the bank anyway.  A Quit Claim is where he just signs the Title to the property over to you.  Any Realtor of Escrow Agent can help you with this form.

If he insists on a contract and an escrow then insist on taking the property "Subject To" the existing financing.  This means you take over ownership and the existing mortgage is left in place.  You may want to check out the terms of this mortgage ahead of time as it may be an ARM that the interest rate has gone thru the roof on.

Technically if you take a loan over without Assuming it the bank should call the note "due and payable" based on the "Alienation" Clause in the mortgage, but with so many repos on the market you have little fear of that happening.

After you close escrow you will have to bring the mortgage current.  I'd suggest you find alternative financing as soon as possible as it may become a hastle to keep this mortgage.  Remember the mortgage is not in your name and the monthly statements will not be mailed to you.  Also you will not receive the tax benefits, because its not your mortgage.

Getting a Title Report would also be very smart.  The Seller may have all kinds of Debt attached to the property that you are not aware of.  If the property is Quit Claimed to you, you will not be responsible for this debt, however if you try to refinance or sell the debt may have to be paid.

So get a Title Report to ensure clear title, Get property deeded to you, Bring mortgage current and then Get it refinanced as soon as you can get reasonable financing.

Mr. Financial Freedom

http://www.5stepstofinancialfreedom.com

Answer 3

You can't take over his mortgage responsibility unless the mortgage is assumable (very few are).  You should start looking for loan financing on your own, determine for how much you would qualify, and then decide if you can afford the amount needed.

In such a situation, I'd venture the bank would be PLEASED to sell the house for what is owed on it, along with the taxes.  If you are lucky, perhaps even a bit less.

You will need to work with the current owner to tender an offer to him, and he can present same to his lender (if your offer is for less than is owed) to see if they will go along with a short sale.