Buying a note

[Casey York]

I want to buy a property that has been vacant for many years. Previous owners are unwilling to even talk to anyone and claim they don't own the property. However, through some mix up in paperwork when they filed bankruptcy, they are still listed as owners. The Bank that owns the note says they are not allowed by law to speak to anyone except those owners. Vicious circle!

Is it possible to contact the Bank and see if they will sell the note. And what would be the best way to proceed with that?

[John Miller]

My first question. Is the bankruptcy still on going or has it been dismissed by the bankruptcy court? If not dismissed and you buy the note several things can happen. The worst. The court cramps down the note and you get less then you might of paid for it. The best, if the lender has not already done this, you have your legal council file for a release of stay. You have to give proof to the court that principal note value is less then the value of the property (remember in bankruptcy court I have never seen anyone get interest on a note).- If the release of stay is granted you then hold your foreclosure sale.

Lets be positive and assume the bankruptcy has been dismissed and the lender has never started the foreclosure process. You buy the note, depending on the state laws of where the property is located the foreclosure process can be simple (Deed of Trust State) or long (redemption rights on mortgages). It there are long redemption rights I would suggest trying to pay the debtor a fee to just sign the property over to you. I would also suggest using an attorney.

Yes banks will sell notes, especially when they are upside down in them.

I have to assume the bank is not getting paid, so call them and ask to speak to someone in the delinquent department. Start with them they should get you to the correct area about purchasing the note.

Make sure you do your due diligence on the value of the property prior to making an offer as I am sure there could be surprises of damage and maintenance on the house. I would also suggest to run a title report to see what other liens could be against the property. Life has enough surprises without adding more on what you thing is a great deal

Best of luck