Buying defaulted mortgage notes directly from banks

[Sam Chainani]

I came across following idea from internet about buying defaulted mortgage notes directly from banks. However, I need some more help. Please help. Thanks, Sam

Contact homeowner in pre-foreclosure. When you first approach the homeowners about helping them out of their property, you'll want to let them know that you aren't going to save their mortgage you're just trying to give them a clean escape from having that defaulted mortgage on their credit. After you've spoken with the homeowner and they've agreed to sell to you, have the homeowner under contract to sell their home to you. This is even though you are going to buy the note on their mortgage. You'll just have them sign the contract so they are locked in with you, and the homeowner doesn't turn around to try and sell the house to someone else while you are working with the bank. Once, you buy the note the contract becomes irrelevant.

Go into the bank and ask them if they would consider a Short Sale to you. Usually they'll say yes and begin to give you all kinds of information to turn in for final approval on a short sale. Then, you can come up with, 'Hey, wouldn't it just be easier if I bought the note from you?'

They'll usually jump on your suggestion because it is so much easier to sell the note than get the process of a short sale through their system.

By purchasing the note to the property you basically become the bank. You buy the right to collect the remaining amount left on the defaulted mortgage.

Once you have the mortgage note you have a few options to move forward. You as the mortgage note owner could continue on with the foreclosure, get a 'Deed in Lieu of Foreclosure' or modify the loan.

MY QUESTION:

1. WHAT SELL PRICE SHOULD BE INDICATED ON PURCHASE CONTRACT?
2. WHAT OTHER DOCUMENTS SHOULD I ASK THE HOMEOWNER TO SIGN?