Loan mod for borrower who quitclaimed property

[Bob Malecki]

We have a NPL on a SFR property in Illinois with a foreclosure sale date next month. Borrowers finally came to the table for a loan mod earlier this month (they have been disputing the debt for a few years). They submitted their financial statement and appears to be able to afford a reasonable monthly payment. Now, here's the hair on the deal:

They quitclaimed the property to another party in 2011 and they stopped paying the loan around the same time. Our research indicates that they do not reside in the property and the party to whom it was QCD'd is living there. 

Of course the borrower is still responsible for the debt and has not yet filed BK to delay the foreclosure. I really do not want another foreclosure in our portfolio and would like to get this loan reperforming despite the above outlined circumstances. 

If the borrower agrees to the modification terms and starts performance (including current on prop taxes & insurance), is there anything I need to consider or have concern? @Steve Hodgdon, you have any thoughts on this one?

Thanks

[Andy Mirza]

@Bob Malecki Given the borrower's past actions and behaviors, I wouldn't believe anything that they presented to me. I think that the likelihood of the borrower following through for the medium term is extremely low.

Is your goal to keep this in your portfolio as a re-performer? Does it make a difference if it's a rental for a while before you can sell it with owner-financing?

I'd ditch the borrower and the current occupant, foreclose, and clean up the mess, even though it might take longer because the borrower may continue to fight in court or file BK. But that's just my opinion :)