Pre-Forclosure Purchase Advice

[Roger Pokorny]

Has anyone negotiated a pre-forclosure deal where you were able to get the homeowner and the lienholder to agree to allow you to assume the homeowners mortgage at a significantly reduced rate?  What steps would you recommend in pursuing this deal?

I have a lead on a property that is scheduled for foreclosure in a couple months that I am interested in buying.  I have not contacted the homeowner yet and wanted to have a good understanding of how to approach a pre-forclosure, as I have not done one of these deals. 

Here are some of the numbers:

Estimated ARV: $150,000

Judgement against homeowner:  $116,000

Estimated repairs (based on drive by):  $50,000

Target purchase price:  $55-$60,000

My first preference would be to get the lienholder to agree to allow me to assume the mortgage at $.50 on the dollar.  I also know there is a clause in almost all mortgage contracts that will call the note, if the property is sold.  I have read where some investors have been able to work around this and convince the lienholder to allow the mortgage to be assumed.  The second option would be to line up a private lender and make a cash offer, on a short sale.  I only have $40,000 to invest in the deal.

There is a lot of due dilegence that still needs to be done on this deal, but I like to have a game plan in place before I start the process.  I would definitely need to get inside the house and do a detailed repair estimate.  I have not contacted the homeowner yet.

I am looking for the steps necessary to pull off one of these deals.  I have an attorney that I can use to work up an necessary paperwork.