Buy a home from a person that's letting it go into foreclosure?

[Wei Huang]

Hi BP - wanted to hear some thoughts from everyone's creative minds on this: I am in the Richmond VA market and one of my off market leads is a person who is letting a home go into foreclosure. She basically said she would "sell" me the house at cost where she doesn't have to put any more money into it (making any more mortgage payments, closing costs, etc). She already began the default process and haven't paid the last couple mortgage payments. The only thing the seller said she is willing to do is to get on the phone with the bank and authorize me (or just conference call the bank) to discuss loan condition to sell me the house.

Now the loan balance is around 60k and likely plus a couple of penalty charges. Houses in the same condition in the same neighborhood were sold for around 60k and were off market transactions as well, most likely bought by investors. ARV could be in good 100k+ if done right and rent for 1000-1200.

My question is has anyone done this type of negotiation before with the seller's bank?  Is there any incentive for the bank to settle for much less than the balance to transfer title to direct buyer (assuming it costs them certain amount of money to foreclose)?  If so realistically how much less would they settle for?

Definitely open to hear if you have actual experience on negotiating with the seller's mortgage provider/bank as a buyer on a scenario like this. Also, please DO NOT worry about the seller's situation to comment on it; she does NOT care to do anything else, including short sale, other than just letting the house go foreclosed. More curious about what I can/can't do or should/shouldn't do in this scenario.  Any creative minds have done this before?

[Wayne Brooks]

Without the borrower willing to participate in a short sale, you have No chance of getting a reduced pay off, assuming this is a traditional lender/mtg.