Foreclosure in 60013>Question Details

Daistuff, Home Owner in 60013

Owners walked away 2 yrs. ago from house next door. REO says it's owned by owner. Can I purchase from owner? Will I owe their debt?

Asked by Daistuff, 60013 Mon Jan 30, 2012

House isn't listed for sale anywhere, but I do have previous owner's contact info., and I know they're not paying mortgage currently. Pretty sure they would sell, but would the debt be transferred to me? Who do I contact for info when the house is in limbo, not listed anywhere? Concerned about the house sitting vacant so long, pretty sure it's destroyed so the value is diminished.

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If the owner still owns it: Yes, you can purchase it from the owner.

It doesn't matter whether it's on the market or not. If the owner's willing to sell and you're willing to buy, then the deal can work. (Investors do that all the time.)

No, the debt wouldn't be transferred to you. But . . .

Let's say the owner owed $100,000 on the mortgage. And let's say he's failed to pay $15,000 over the past two years. For you to purchase and get clear title, you'd have to pay $115,000 (plus any penalties, plus any back taxes, etc.) So his debt wouldn't be transferred to you, but you'd have to pay enough to wipe out the debt he does owe.

There is a technique that gets around that, in a way. It's called buying "subject to." The owner would deed the house to you. You'd pay the arrearages (back taxes, back payments, etc.) and resume making his mortgage payments. It's not assuming his mortgage; it's paying his mortgage for him. At some point in the future, you'd refinance your house into your own name, removing him from the mortgage. Note that doing a "subject to" very likely could trigger the "due on sale" clause, giving the bank the right to demand payment in full. However, it's also very likely that the bank would be delighted that someone had started paying the mortgage again--it probably wouldn't care who that person was. But that is a factor you should be aware of.

One other possibility that might or might not work--if the owner is agreeable--is a short sale.

Who do you contact for info? A Realtor or a lawyer could help you. You first have to make sure that the house hasn't been foreclosed on yet (despite what REO said.) You then have to find out about the arrearages. It's possible that some of them can be negotiated down. If you want to purchase conventionally or via short sale, use a Realtor. If you want to do a subject to, you might be better off using a lawyer.

Hope that helps.
0 votes Thank Flag Link Mon Jan 30, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
I understand your confusion. The bank's response makes absolutely no sense. If the house is "with them" but they're not currently marketing it, that'd mean that the house was foreclosed upon and now it's bank-owned. In that case, you'd have to wait until the bank decided to "market"--that is, put the house on the market--the property.

But then the bank says you have to contact the owner? The owner would be the bank, if the foreclosure occurred. (Maybe there's some sort of redemption period--some states have that--though I don't know about Illinois.)

Where to start: Try a Realtor first. He/she can check various records and perhaps give you an answer as to who the owner is. That won't cost you anything. Then, if appropriate, you can proceed to a lawyer.

Hope that helps.
0 votes Thank Flag Link Mon Jan 30, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
The township said one bank owned the property, but when we contacted their REO they had no record. A notice went up on the door for a different bank, and that's the bank that confirmed the house was with them, but said they aren't currently "marketing" the house, I didn't know what that means? They said you have to contact the current owner if you're interested in buying. I said which bank is that? They said that's still the owner. I didn't understand how that could be. I think I will have to contact a real estate agent or lawyer, don't know which is better between those two?
0 votes Thank Flag Link Mon Jan 30, 2012
Unless it is a sheriff's sale, you would need to pay to bank and you would not be responsible for their debt if you get a proper title. However, many times banks will not sell if it is not on the market. You would need to find out who the public records say own the property. Ask the village, they may know.

The bank may or may not have possession of it right now. 2 years ago, so maybe. But since banks don't always put everything on the market right away, they could be holding. When dealing with the bank though, if you are not going to use a Realtor, it is a good idea to use a real estate attorney to ensure all leins are settled, etc. This is not the former owner debt, but sometimes leins for grass cutting by the village or taxes, etc.

I would encourage you to have a Realtor help you though. It doesn't cost you anything. Look at Trulia for Realtors in your area.
0 votes Thank Flag Link Mon Jan 30, 2012
As far as I know, the debt should not transfer to new owner. I would make sure you get a clean title. A good attorney is a must. Let me know if you need referral.
Web Reference: http://Kkyan.com
0 votes Thank Flag Link Mon Jan 30, 2012
Any reason you must have a house that's not on the market? If it's an REO, you'll get a clean title. If you try to buy a property in some stage of foreclosure, you'll run the risk assuming additional liens. Since the property is not on the market, you can only try contacting the owner, since there would be no agent handling the sale.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Mon Jan 30, 2012
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