Negotiating a Second Lien on a Subject to

[Sebastian E.]

Hi BP! I need some wisdom here. I am analyzing going in on a deal that is subject to financing. The property has a first mortgage of 220 and is behind 13 months (11k) and is in pre foreclosure. The seller has a second mortgage of 53k (HELOC) that has been charged off. So the total payoff to me to cure would be 64k and I'd need another 6 in rehab costs to put me at 70k into the deal and the property would be worth 310 at that point. What I like about the deal is that the existing mortgage is 10 years into a 3.5% 30 year mortgage and the property is an end unit in the path of progress. I have another rental on the neighborhood so it would be easy for me to integrate in the rental management and I can cash flow. The big question I have is once I get the first current, what are my chances of negotiating down that second HELOC balance. Has anyone had any success on this in the past? If it went into foreclosure i am pretty sure the second would be completely wiped out (although I recognize that rational arguments like these don't always work with the banks). I have authorization from the seller to talk to both banks so I am going to get started on that on Monday. I'd appreciate any advice you can offer this newbie on what could be my first subject to deal. Thank you! Seb

[Kerry Baird]

I worked a similar deal: the first was foreclosing and the second would very likely be wiped out at auction.  I called the second and offered them $3000 for their $15000.  They took it.  I cured the first, remodeled the house and sold it a couple of months later.