I purchased the 2nd mortgage on a house at foreclosure auction for $10,200. The first mortgage payoff today is $288k. I put $22k into fixing up the house for sale and there are 5k of back tax debt attached to the property. I've had the house on the market for 2 months and have dropped the price to my break even point and still no offers. The first mortgage holder has begun the foreclosure process. I have contacted them to see if there were any options for settlement. They maintain they can not settle with anyone but the person that the lien is assigned to (previous owner). Obviously I'd like to get out from under this property and get back my original investment. Do you have any advice or channels of recourse you might steer me towards?
You bought a property that was subject to a $288,000 senior mortgage. You did so, I surmise, because you assumed the property would fetch more than than the balance of the mortgage, plus your cost of renovations, plus your purchase price, plus the delinquent taxes. Now, when you try to sell the property, your guess as to the property's market value was too high.
To make matters worse, the holder of the first mortgage will not negotiate with you, and instead insists on working with the original owner. What is unclear to me is whether the first mortgage holder has the right to foreclose on property that has already been foreclosed upon. I am curious if you purchased the second mortgage at an actual foreclosure sale, as you mentioned, or some other right.
Consult with an attorney in your state regarding your situation. He or she will be able to gain a better understanding of the chain of event that occurred here. Also, he or she will have an understanding of your state's foreclosure laws (each jurisdiction's laws in this are vary), and will be able to advise you precisely.
I hope this information helps you Find. Learn & Save.