Owner Finance or Subject To?

[Sheree Fullwood]

Hi BP Family,

Quick question!

So I may have a potential deal in the Brooklyn, NY area. The property is in foreclosure, but the home owner is still interested in trying to salvage whats left of their credit & not lose the property. I spoke to them & we were thinking of doing either an Owner Finance type of deal or "Subject To". Either way, this deal would involve the potential investor wanting to buy & hold.

My question is, can this be done while the property is in foreclosure or only pre-foreclosure?

[Ron S.]

Originally posted by @Todd Franklin:

I think you may have a hard time getting this done while in foreclosure unless you can get the bank to agree to a restructuring of the loan first.  Usually, it is too late in the process to perform a short sale, so that means the bank is going to want the full amount of the loan before the foreclosure sales date.  

Sometimes the bank can take up to 2 years to foreclose on a property though, is the sales date set?

There is not a chance in the world of that happening. no bank is going to restructure a loan in default for the benefit of someone trying to invest in the property. Pay it off or they go to foreclosure (if they won't do a short sale and even if they do, you still have to pay it off for the short sale amount!)

@Todd, the "Stalling" of a short sale can ONLY work if you are outside of 37 days from sale AND you have a full package short sale offer on a property that is listed for sale on the MLS. A full package will consist of borrower's financials and proof of funds from the buyer with a fully executed purchase and sale agreement. If you don't have all of that, stalling a short sale is a myth and urban legend if a bankruptcy filing doesn't accompany it.