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Negotiating down a second lien - http://www.dealmakerscafe.com Forums

Original message

Manneke

"Negotiating down a second lien" , Thu 1 Feb 09:49

All,

I signed a purchase agreement last week to take a house subject-to that's scheduled for foreclosure at the end of the month.

I just found out that there is a second lien on the property (the seller 'forgot' to tell me).

In order for this deal to be worth pursuing I need to get a reduction/elimination of the second lien. If I can't get it reduced the deal is dead.

Have any of you had any luck negotiating down second liens? What should I expect that they'd be willing to take? Since it's going to be foreclosed at the end of the month they won't get a dime unless they work with me. I was thinking somewhere along the line of 10 cents on the dollar but I have no reason to think it couldn't be less.

Any thoughts would be appreciated.

Replies:

Al Jordan

"Re(1):Negotiating down a second lien" , Thu 1 Feb 11:25

Manneke,
What kind of lein is it? Who put it on the house?
Al

"Nothing in the world can take the place of perseverance...
Persistence and determination alone are omnipotent" -Calvin Coolidge

Manneke

"Re(2):Negotiating down a second lien" , Thu 1 Feb 11:57

It's from a finance company. It looks like he took out some kind of home equity loan a few years back.

Lynn
Moderator

"Re(3):Negotiating down a second lien" , Thu 1 Feb 12:05

They may accept a lessor amount to pay off the note, but don't assume that they are just going to be completely out if it goes into foreclosure.

Depending on the size of the note, many times the second mortgage company will buy the house at the court house steps to protect their interest.

Call and make a low-ball offer to see what happens. You don't know if you don't ask!

Suppose they say okay, we'll take .50 on the dollar, where are you going to get the $$ to pay up the first and pay off the second?

Lynn

Knowledge is important but all the knowledge in the world is worthless without action! How many offers did "you" make today?

Manneke

"Re(4):Negotiating down a second lien" , Thu 1 Feb 13:04:

Cash is going to be an issue.

Here are the details of the deal

First Mortgage: $75K
Second Mortgage $8K
FMV: $95K

Back payments and legal fees to bring the first mortgage current are $6,800. I'm trying to sell it on a L/C with $9K down. I may have to leave the second in place unless I have enough of the downpayment left to pay it off after I renegotiate it. If I have to do that I'll break even on the monthly cash flows.

[this message was edited by Manneke on Thu 1 Feb 13:07]