Question: I like to buy a condo unit being sold by the owner who has been trying to sell it for months. He paid $260,000 for the unit and has a mortgage loan balance of $180,000. A mutual friend told me that he might just abandon the condo to foreclosure. I plan to buy it for about $160,000. What should I do? Should I talk with the mortgage bank directly?
Answer: The first thing you need to do is to contact the unit owner and ascertain if he is really selling his condo. The mortgage bank cannot sell the unit until it is declared a foreclosed property.
The next step is to check if the owner has other debts linked with the title or with the condo unit. Make sure the title is free of other liens against the condo, such as a second mortgage or a tax lien. Check also if he has been paying his condo fees. You also need to make sure that the condo association is not burdened with debts and foreclosures.
If your plan is to pay in full what the condo owner owes the bank, you don’t need the bank’s approval. What you need to do is to talk with a real estate attorney about accomplishing a sales agreement with the owner. The contract needs to spell out in clear language that the completion of the sale depends on the condo owner’s delivery of the title to you free of liens other than the original mortgage.
If you’re unable to pay the loan balance in full, you need the bank’s approval. What you will accomplish is what is called short-sale. You and the condo owner will sign a real estate agreement that will be dependent on the bank’s approval. Because of the high number of foreclosures, short-sale filings and foreclosed home auctions, expect some delays in getting a response from the mortgage bank.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.
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