Help - Trustee Foreclosure?

[Peter Hanna]

Hi BP members. I asked this same question in general Q&A forum, but couldn't figure out how to delete it and move it here.

I've stumbled across a property in a status that I am unfamiliar with so far in my education. My neighbor has a house about to go to auction in a "Trustee Foreclosure". I found out about this Saturday, April 15, 2017 around 5:00p.m., so I have been scrambling to learn/prepare. What I've seen on BP is how to bid at one of these auctions. But, as a neighbor, I might be in a position to step in before hand and help the homeowner. I don't know much about these kinds of deals, and if I take this it will be my very first deal. What I have learned has been that it's possible to stop a foreclosure by: 1 - getting a contract where the HO retains responsibility for the loan, but signs a contract with (Me, hopefully) where I have rights to the deed, or the deed itself; 2 - I know I then catch the note up to current and maintain until rehab/sell; 3 - (in this case I will) Offer Cash for Keys to help the owner vacate the property and move on with life.

The details (what I know so far):

• Home has two mortgages, one for 80%, one for 20%, on original value of $100k
• I'm getting an agent to give me current comps tomorrow, but what I've seen in my neighborhood is homes going for $120k to $136k.
• Auction is May 2, and they have to do something by the 29th (maybe the 28th)
• Taxes are current
• Note unpaid for almost a year
• Owner's current life circumstances make her a reluctant but motivated seller (she can't afford to go anywhere, but they are going to have to move no matter what)
• (I think) the lender is called "Aukland" which, if true, has some bad press in Google, and looks like a brokerage out of New Zealand.

What I don't know:

• What is the difference between this kind of foreclosure and a "regular" bank or a Sheriff's/Tax foreclosure?
• Is it possible to negotiate price in this situation, or am I stuck? Can I offer less than the note and have a chance?
• Will the owner know of all the leans against their property, or do I need to do a title check anyway?
• Is there time for me to do this?
• What kind of contract do I put this under? Is there boilerplate, or should I get a lawyer to draft one up? (I'm not sure how long this could take, and it seems there is a need to hurry here).
• Will I need separate contracts with both owner and lender?
• Will eviction still be required, as due diligence, or will just leaving be enough?
• Is one of the calculators going to work for assessing the deal? Or are there more "gotchas" than are calculated for in the tools here? If no calculator, how do I construct a MAO number for this sort of deal?
• What else do I need to know that I don't know about?
• Are there blogs that I can ingest to catch up quickly about this kind of thing?

Thanks for helping, especially today.

Peter Hanna

[Account Closed]

@Peter Hanna I think the lender would be Ocwen which has a terrible history of fraud and deception with borrowers. Run a search on Ocwen and check RipOffReports.com

That being said, simply selling the house won't stop the sale. You will have to call Ocwen or the Trustee and get a reinstatement amount. They may be able to fax it to you. They will probably deal only with someone on the note or someone who has been authorized. To get a "rule of thumb" arrears, multiple the number of months of missed payments, multiple by 5% for late fees, add about $3,000 for legal fees and you should be in the ballpark.

Without question have a Title search.

Is it the first or the second loan that is in foreclosure? You need to find out the status of the other loan and the amount of payoff there too. 

Once you have the principle of the first, the principle of the second, the arrears, (the amount to bring the loan current) how much "walking money" the homeowner is going to get, the rehab costs, and the real estate agent's fees for selling and probably 4 months of carrying costs, you add all of that up and subtract it from the anticipated sales price one you've fixed it up. That would be your profit (or loss) and an awful lot of people get buying foreclosures wrong and lose a lot of money. So, be conservative with the numbers.

Yes, you would have to evict if they don't go willingly.