Private lender foreclosure timeline

[Armando DeGuzman]

Have been offered an off market deal through a private money lender. The lender has offered us a property that another rehabber has defaulted on. The owner of the property is in jail and the lender plans on assigning the propeety to us in order to complete the rehab. We’ve analyzed the numbers and its a great deal. The property is in great shape and it wont take much for us to finish it and flip it. My question is how long does the foreclosure process take when a private lender has the lien? I know a standard bank foreclosure process usually takes long. What risks or pitfalls should we be considering in this transaction? We plan to open escrow shortly and move forward on this deal. Thanks.

[Ron S.]

The only way the lender can sell you a loan/home they don't own is through a deed in lieu of foreclosure, where the lender and the borrower agree to forego the foreclosure process and just hand over the proverbial pink slip, and both walk away. Borrower let's go of the property and the lender gets it back. Anything short of that requires a foreclosure sale on the courthouse steps (Or whatever methodology that local jurisdiction employs) in order for the lender to gain ownership. The only other way the lender gains ownership is to be the high bidder at sale.

All of that crap some other poster is spewing is just crap. No, there doesn't have to be a law firm and outside of a lawsuit, AZ is a non judicial foreclosure state meaning a trustee initiates the foreclosure, not a law firm. There may be a law firm doing the trustee work but again, outside of a judicial foreclosure (meaning a lawsuit) it's a trustee, not an attorney.

Finally, when you say "Assume", I'm guessing you mean the lender is gonna sell you the note, in which case, you didn't assume anything, you bought a note. If that's the case, and if you want the property, you have to finish the foreclosure OR, the borrower does a deed in lieu of foreclosure with YOU (Instead of the original lender). That's the only way you are getting the property without a public sale that I can see. I suppose you could just buy it from the borrower and he gets to pay the note off from the lender with the proceeds of the sale but that doesn't sound like what you are trying to do.

At the end of the day, there are a lot of missing pieces to your scenario and/or a lot of misuse of the terms used in this industry. The one good piece of advice you got is, call an attorney.