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October 5, 2009
Bizarre Foreclosure Scenario
Hello all,
A friend of a family's acquaintance is under water in his mortgage (sunset park). His original mortgage was for 679k, hes at 9.875% apr and hasnt paid in 3 years. He currently owes 802k. Anyhow, my dads friend friend lives in the house that I am talking about. The tenant has been living there for 2 years without paying rent because the owner has gone AWOL. The renter received a bunch of documents about the house from CitiBank. They have told him to pick up the house before its foreclosed. The renter has no interest in owning it. The house is a complete mess. The renter gave my dad all the documents the bank sent him and asked him if he was interested in it. I am actually interested in this property if its dirt cheap. I thought of a few scenarios:
1- buy the property with my brother in law and brother, destroy it and sit on the property for years until a developer wants it (what are the tax implications for just having a lot)
2-buying it with them and rehabing it (any govt assistance in this? maybe the neighborhood rehab program?3
3-destroy the property and use it as a parking space until a developer wants it
It seems like the bank really wants someone paying them. Chase Home Estimator and Zillow valued it at around 450-550k. The house is also very small around 1,300 sf.
Ive got on hand about 200 pages of documents on this house. How would anyone go about this situation?
[ offer them 50k ?? :)]
Comments
I think you're out of luck. I doubt they'll take anything under 600K. They can auction it and probably get that much.
Posted by: Kensingtonian at October 4, 2009 1:41 PM
id be surprised if the place fetches that much! its a POS
Posted by: guikazoid at October 4, 2009 3:44 PM
live in it another two years and then take possession as abandoned property.
Posted by: bobjohn at October 4, 2009 5:34 PM
Don' be surprised if some real estate agency that has an interest in the neighborhood doesn't buy it just to not make prices go down on the other properties they own near by. If I were your friend tell him to live as long as possible in there rent free. If slumlords are getting breaks why shouldn't renters?
Posted by: hannible at October 4, 2009 6:20 PM
The figures dont match up, if the owner is 3 years behind on a $679,000 mortgage at 9.875% the current balance including principal, interest and late fees would be in well above $900,000.
You also state that the owner of the house has gone AWOL.
Unless the owner is located and is willing to sign over the deed, the only option for the bank is to sell the property at auction.
The bank does not own this property, the bank as mortgagee is merely a stakeholder with a mortgage on the premises, they do not have the right to sell the property, the only right they have is to commence a foreclosure action and ultimately the court will appoint a referee and the referee will sell the property at auction and deed the property to the successful bidder.
The papers that your friends are receiving are most likely the summons and complaint which is usually sent to all parties who live in the building. It is being sent to them in order to foreclose their rights as tenants.
If the owner can be located and is willing to sign over the deed, you can contact the bank and I am sure they will accept a much lesser amount than what is owed.
If the owner is nowhere to be found, than your friend just needs to sit tight and not pay any rent and ultimately there will be an auction and the building will get sold to the highest bidder and the new owner will deal with the tenants in possession at that time.
Good luck...
Posted by: jre at October 4, 2009 7:56 PM
jre- from sorting thru the documents thats what the totaled owed says. theres literally a couple hundred pages, you'd need a lawyer to interpret all this. you do mention a "referee". there is a document with a lawyer signing it as the "referee". the document is titled "Schedule A: Abstract of Documentary Evidence"... it shows a statement.... with a breakdown of whats owed. its dated 10-23-08. maybe thats what the #s might be a little off. the #s are from 2008! wow! i guess the process has begun. im going to call the lawyer tomorrow and see whats the deal
Posted by: guikazoid at October 4, 2009 8:44 PM
sounds like a mortgage fraud scenario...do not even think about getting involved
Posted by: eman1234 at October 4, 2009 9:29 PM
Mortgage fraud? Eman when was the last time you heard of a mortgage broker going to jail for inflating the value of a home or a client for buying a home at an over inflated price? Welcome to the toxic acid ninja bubble market. It is just starting to hit the fan in Brooklyn. The best is yet to come as far as home prices are concerned. Jut wait another 6 months
Posted by: hannible at October 4, 2009 11:32 PM
You can't destroy the property if you obtain a mortgage on it. When you sign a mortgage you also sign and agree to maintain the property. If you buy it free and clear go right ahead and destroy it if you want.
If you have a mortgage and knock down the property the bank will call the loan due and you will need to pay off the mortgage at that time.
Posted by: Adam Dahill at October 5, 2009 9:30 AM
wouldn't you have issues with the city if you tried to run a parking lot there? also, I wonder if there is a special permit process for a demolition. wouldn't you have to submit some kind of plan for the lot? I don't think the city wants more vacant lots around.
Posted by: joe_the_bummer at October 5, 2009 2:43 PM
ive called citibank this morning nothing... no one knows anything. i check NYC DOB and there's a bunch of violations (recent ones)... the latest illegal conversion... "EXTENSION ADDED TO FRONT OF HOME WITHOUT PERMIT VIO ISSUED"
when i went by the house yesterday that "conversion" looked like a shack built with cinder blocks and some paint!
ive tried contacting one of the lawyers listed in the documents... nada!
Posted by: guikazoid at October 5, 2009 2:52 PM
stay away...
Posted by: myrtleandwashingtonave at October 5, 2009 3:30 PM
Rule of thumb that never fails:
If it looks to good to be true, it is.
Posted by: serpentor at October 5, 2009 4:55 PM
Goodness gracious! This sounds like a real mess! You're initial post is rather amusing...don't be offended.
You certainly will not get the property for $50,000. Trying to get info from Citimortgage (especially when you're NOT a concerned individual) is...well, you might as well not even bother! ;-) at all...
And you're not tearing anything down. Just simmer down and give your flights of fancy a rest for now. If anything we read from some of the doom-and-gloom posters comes to pass, you'll be able to pick up a house for "half off peak comp". From that formula, it sounds like this house would go for $300,000 or so.
Good luck!!!
Posted by: BrooklynGreene at October 5, 2009 5:12 PM
There's so much for sale cheap right now that's income producing, why would you want to buy expensive land and make nothing until you sell it years from now?
If you believe you can buy it cheaply, buy it, make it livable, and sell it in five or ten years after the market has hopefully rebounded.
Posted by: IronBalls at October 6, 2009 3:52 PM
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