Thank you all for your responses! Great information and much appreciated. I am finding this site to be a wealth of valuable information and feel fortunate to have found it.
So, I understand that purchase price of the note is irrelevant - the full value of the note is still the obligation and what would be due to me as the note owner. Since my ultimate goal is to acquire the property it seems that buying the note & foreclosing is a sound strategy in that I would then have the leverage to effectively lock other potential bidders out since no one in their right mind would bid up to the value of the note, which is more than twice what the property is currently worth.
I like the idea of quietly taking possession of the property via a deed-in-lieu but that would likely be difficult as the original owner is purposefully in absentia. He did some creative refinancing just before the real estate market fell apart, pocketed the cash and disappeared, apparently out of the US. The paper trail indicates he knew exactly what he was doing and never intended to make good on the note.
I spoke with the BK trustee's counsel and he said that if I were able to secure the note and prove that the property has no equity (easily done), the BK court would abandon the property, which would then allow me to proceed with the foreclosure. I deal with a BK attorney who would facilitate note purchase and navigation out of BK court.
I will only purchase the note at a a deep discount - repairs, market, what is unknown @ the property, etc., indicate anything other than a deeply discounted note purchase would be foolish.
A few more questions:
1) With the original owner out of the picture is there any way to proceed with a deed-in-lieu through the BK trustee/court in the original owners absence?
2) If no to the above and I need to proceed with the foreclosure, is there any state (CA) legislation or other bureaucratic barriers that would delay my ability to foreclose? It seems banks are routinely postponing or canceling foreclosures in California and I am concerned that underlying factors I am unaware of may affect me accordingly, leaving me in foreclosure limbo.
3) Is there any way the original owner could weasel his way back in to the property if I were to proceed with purchasing the note/foreclosing? Mortgage payments are delinquent for about 1.5 years but the original owner is real estate savvy and may possibly utilize any loophole available, perhaps through another party.
Thank you all again for your valuable input!
