I am in an agreement with homeowner, whose property currently scheduled for auction this Thursday, to buy his house. The price is ~50K over the debt to the lender (mortgate balance + outstanding balance + fine for being late). The owner and I had contacted the lender last wk to get their approval for this sell and cancel or postpone the action date. The lender required us to provide the followings: Sell Contract, Escrow Instr, and a final pre-approve from a big bank. We had sent the whole things as requested from the lender last Thursday, Nov 12. please let me know is it a right solution to me as a buyer and the lender.
Shoot, I can’t see how the lender would complain if they are getting paid off in full. Same goes for the homeseller - they will still show a foreclosure on their credit report, but that will be followed by a paid in full, which I’d think would be far better than if the house had completed foreclosure.
Whether or not it is right for you I couldn’t begin to say. I’d recommend working with a local Realtor to make sure you are paying a fair price, and that you have done sufficient due diligence on property condition, etc. Any good Realtor will make sure that all required disclosures are made, and should urge you to get pest and home inspections, etc.
Regardless, if you do move forward, make sure you stay right on top of the bank. Not unusual at all to get approval from one department, and then have another department go ahead and foreclose.
Finally, since you did post this in the buying at auction forum, you may want to consider whether or not buying the property at auction is a possibility. You’ll have to come up with the cash to pay in full, and you’ll have to be comfortable taking the risks around title insurance, inspections and eviction, but it is quite possible you could save the $50k premium over the loan balance that you are paying to purchase the home from the current owner. If your buying this as your own home I personally think the extra $50k might be worth the peace of mind.