Buying nonperforming note

[Pete Storseth]

If you buy a house from the 1st lien holder, do you inherit the person on the lien?

There's a house I may be able to buy from a lender with an interest only loan. The buyer is way behind on payments and cant catch up. The buyer has zero equity, but the lender has 100%.

If I buy this house, what happens to the lien and the buyer? Is it up me? Do i have to foreclose on them? Do I have the option to forgive the loan and sell to someone else?

[Chad U.]

Originally posted by @Pete Storseth:

@Wayne Brooks

Understood. The buyer was my original contact that I was helping. This will save him from foreclosure and forgive 7k of debt he doesn't have. I believe he would agree

I would highly highly suggest you have your real estate attorney who is well-versed in creditor protection rights review the entire transaction before you follow through with it. There could be liens on the property that you are not aware of as well that will survive if you take a deed-in-lieu , so that needs to be thoroughly checked. You may also want to draft up some sort of agreement with the homeowner prior to purchasing the note that he will execute the deed in lieu. I am not sure if that is even legal but best to check with an attorney as mentioned. You can certainly offer cash for keys for the deed in lieu to the homeowner however you cannot technically do this until you have possession of the note.