Posted by David Butler on March 26, 2007 at 17:17:38:
In Reply to: discounting reo note can i do posted by big ced on December 07, 2006 at 20:13:40:
Hello Big ced,
Though the bank bids what they are owed on a nonperforming note in foreclosure, they do not "buy" the house. If no other bids, they are repossessing security for the note. As such, the note is extinguished, because the bank becomes the owner of the home. They then look to sell the home, to recover as much as they can of the balance remaining due on the note that has been extinguished. There is no note to sell, only the home. Not sure why anyone would want to purchase such a note if it were possible, no matter how cheaply. But legally not possible.
What is possible, is buying the home at a decent discount from the repossessing bank. That is a whole niche of its own in the creative real estate investing sector.
BTW... any time you do buy a note secured by a home, the Payor owns the home. You only own the note. Now, they pay you, instead of the previous note holder. That's the only change for them.
Hope that helps and good hunting.
David P. Butler
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