How to find what the seller owes

[Matthew Thorp]

How do I find out what a person owes on their mortgage before it gets sold at foreclosure auction?

[Sean OToole]

@Matthew Thorp - With the exception of the loan in foreclosure (where actual balance is either posted in the notice, or doesn't matter because the purchase will satisfy it), the only solid answer is to get current statements from the borrower. The reason is that actual balances are not public records data, so your only other alternatives to getting it from the owner are to call their lender and pretend to be them (illegal), or get access to their credit report (likely illegal too unless you get borrowers permission and at that point you might as well just ask for their statements).

With that out of the way, the question then becomes how can you best guess at their balance. To do that start with a title search and try to determine which loans are open and outstanding. Then look at the age of those loans, and any hints as to how they've been repaid (foreclosure notices for example). From there you can use an amortization calculation and estimate current balance assuming they actually made those payments and that if they did not the lender actually filed a foreclosure notice with clues as to the amount unpaid. Companies like ours and Listsource build computer models to estimate current loan balances and equity across large number of properties. It's super useful for searching for properties that might have equity, but shouldn't be relied on when making a purchase.

If you goal is to buy 2nds at trustee or sheriff sales you either need to find a good way to talk to borrowers into giving you their balance, get their balance illegally, or play the odds and know you are taking a risk the balance is much higher then your estimate (lender could have made advances, etc).

Hope that helps.