Eric Jensen, Home Buyer in Marin County, CA

The rental property I am in is currently foreclosing, I want to buy it. How do I buy it?

Asked by Eric Jensen, Marin County, CA Fri Jan 2, 2009

Here is the deal, its strange, it looks as if the guy we are paying rent to is on the title and the loan is in some other persons name. Anyway, that person is now in bankruptcy and the person we were paying rent to was just paying the mortgage under his name. I guess they automatically foreclosed on the loan because the guy on the loan went bankrupt. The bank would not take the checks from the guy that is on title and was paying the mortgage. It seems the guy on the title (the guy we are paying rent to) is not interested in the home. Anyway with all that being said what is the best course I should take in order to obtain the property? Do I go directly to the bank? Thanks

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Sylvia Barry,…, Agent, Marin, CA
Fri Jan 2, 2009
Hi Eric:

Not knowing the details of the situation and the address of the property, I am unable to check the specific house for you.

However, if the bank is foreclosing on the house and assuming that they are really foreclosing on the house, there should be auction date set for the house. The auction might or might not be successful.

If the auction is successful, you will have a new landlord (or they may ask you to move). If not, the bank will end up owning the house and then engage a Realtor's service to prepare the house for sale. They will mostly likely go on multiple listing and sold that way.

Your best bet, if the auction is not successful is to engage the service of a Realtor who is experienced with helping their clients buy bank owned properties to help you. Since commission will be paid by the sellers (lenders in this case), there is no cost to you in getting a Realtor's service.

If you can email me with detailed information, I might be able to do some research on the house and let you know.

Also, if you want to buy this or any house, the first step will be to get yourself pre-approved by a mortgage broker - although a couple lenders will want you to be pre-approved with their own mortgage broker too.

I can recommend a couple reputable, local mortgage brokers to help you.

I am easily reached by email - check my Trulia profile or my website.

Sylvia Barry
Marin Realtor
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Suzanne Whea…, , Locust, NC
Fri Jan 2, 2009
A short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property.[1] In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Most Short Sales leave a deficiency balance for which the Mortgagor / Borrower is still liable. In 99% of all cases it is not a settlement-in-full. A deficiency balance will remain while the mortgage broker, real estate agent / broker, loan officers, title and closing agents retain their profit. No regulatory agency governs this hybrid transaction.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset, businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults
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