his mortgage is one of the bad deals countrywide had but now bank of america owns the loan they wont forclose on him even though he hasent lived in the home for three years the property is just deteriorating by the day i would like to purchas the home from him. He wants me to pay him one dollar for his stake in the house and turn it over to me how can we (the homeowner and i) negotiate this with the bank, the house is not worth no where near the $70,000 thats left on the original loan so what avenues do we (the homeowner and i) have to make our deal a reality!
Divorce / Separation Lawyer
Sadly, the answer is run like hell from this deal!
Unless you can talk the bank into the deal,. and you probably cannot., your purchase will trigger the due on sale clause, and paradoxically, THAT will likely trigger foreclosure,. except you'll lose the home.
Once he sells, he will not be able to negotiate. But you and he will then be in an expensive legal mess.
If you can find your own lender, or a LOT of cash, propose a short sale. It will likely be a BAD financial move for your friend, but if approved, you may get the house. Do not attempt this without a lawyer. And bear in mind, a short sale may fall through too.
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You can also wait on a foreclosure and then buy the house at its market value (maybe even a little less) if this particular house is really the one you want. If you are just looking to help you friend and get the house now at a steal, then as mentioned in the other response that is most likely not going to work out well. You can certainly try to do a proper short sale, with the help of a lawyer but you need to keep the friendship out of the equation for that. If you have cash or financing, just look for the house you really want to buy.
I agree with the others that this probably would not work. The problem is that the debt secured by the property is unaffected by changing ownership, and they can foreclose anyway if the payments are not being made and the loan is in default. Negotiating with Bank of America is not going to get you anywhere. A short sale from him to you approved by the Bank is an option, but would have to be done be the foreclosure date, and could leave him owing the difference between the sale price and what is owed on the loan. Even if you try to purchase the property at the foreclosure sale, the bank will usually make the first bid at the loan amount, which means you would have to pay more to outbid them, putting you underwater from the start. If the bank purchases the property, they will eventually look to sell it, starting at what they have in it. Eventually, the price will come down if it does not sell, but that could be years.
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Generally I agree with what the others have said, but I do think you have some options. For starters, if he's been out for 3 years and the bank still hasn't foreclosed, then they probably wouldn't foreclose no matter what you all did (unless you moved in and turned the place into a palace). That said, these options are given assuming the bank isn't likely to foreclose.
First, you could rent it from him for $1/month. You wouldn't be protected from foreclosure by the Protecting Tenants After Foreclosure Act because it wouldn't be a bona fide lease, but that would prevent the triggering of a due-on-sale clause.
Second, you could rent from him at fair market value. Under that circumstance you'd be protected for the full term of the lease unless the bank sold to a 3rd party or a 3rd party purchased at foreclosure (and 3rd party was going to live there). The Protecting Tenants Act several exceptions so read it first.
Third, you could try the quitclaim route you mentioned. It's true that this may trigger a foreclosure, but your friend has committed so many acts of default as it is (including abandoning the property) that the bank could have easily foreclosed by now if they really wanted to.
Fourth, if you can pay the mortgage and don't want to have to worry about a foreclosure, you could offer to assume the loan. If the house is as underwater as you let on, they'd probably forgive the accrued interest, write down the principle balance, and maybe even lower the interest rate. I HIGHLY DOUBT they will say 'no' to an assumption in this situation (assuming you have decent credit).
William J. Smith
SMITH LAW, LLC
P.O. Box 468328
Atlanta, GA 31146
Business. Consumer Protection. Employment. False Claims. Landlord-Tenant. Wrongful Foreclosure.
Nothing herein should be relied upon as legal advice.
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