buying a note going through bankruptcy

[Drew Poniewaz]

I am looking at a non-performing note that the owner is in bankruptcy. What kind of pitfalls do I need to be mindful of? Where can I find a good resource on these types of transactions?

Thanks in advance.

[Ray Trounday]

Should you decide to pursue the non-performing note it is my understanding that you cannot contact the borrower directly since he is in bankruptcy.   You would need to contact the bankruptcy trustee to understand the borrower's intentions for the home.  I am working on the assumption that the note is in 1st lien position.  If it is not, you need to be wary of lien strip if it is not the borrower's primary residence.  If you are serious about pursuing the note, I would highly recommend consulting an attorney who understands bankruptcy law.