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eng251ine · May 23, 2008, 09:07 PM

I am a MD resident. Three years ago, my neighbors house burned down and they have effectively abandoned the property. I have spoken with them several times trying to determine the status of the property, as I would very much like to purchase it. Shortly after the fire, they stopped paying the mortgage as they did not wish to continue paying a mortgage on a house that no longer existed. They have kept the tax payments current however. For whatever reason, the mortgage company has not chosen to foreclose on the property and to my knowledge has yet to attempt any legal action. I know the owners had a first and second mortgage on the property. Recently the owers indicated that their credit report shows a "Charge Off" for the mortgage status. I have a cursory understading that Charge Off does not mean that the owners are free and clear and that the mortgage company may still choose to take some type of legal action. My question is, are there any legal actions I can pursue to attempt to purchase the property? Obviously the property is worth considerably less that what is owed as there is no longer a house standing. What options might I have in order to purchase the property without having to pay what is owed between the two mortgages?

Thanks

MsMewiththat · May 23, 2008, 09:20 PM

I would imagine, just a guess that you could contact the mortgage company and try to negotiate with them. There is most likely some insurance company involvement. You most likely won't have to pay the entire amount owed, the mortgage company would probably be more than happy to get something for this property given the condition and the state of the housing market. Are the owners in a position to speak with you and the mortgage company? Maybe the owners could do a quick sale. Have there been insurance payments that the owners haven't used towards rehab?

eng251ine · May 23, 2008, 10:34 PM

I am in a position to talk with neighbors, they have received some insurance payout but used none of it to repair or replace the structure that was destroyed, currently the only remains are an open foundation and some lingering debris. Their version of the story is that they are disputing their insurance settlement as they feel they were shorted by the payout. They have no desire to rebuild but can't afford to pay off the existing liens... leaving them in a difficult position, a piece of property not worth what they owe and a mortgage company who for some unknown reason doesn't seem interested in foreclosure.

Fr_Chuck · May 24, 2008, 04:07 PM

If they only had a first, you would have to work "though" the listed owner ( since mortgage company has not foreclosed) you make a short sale offer to the owner, and it is sumitted to the mortgage company. This is because you are going to offer less than full price of the mortgage.
This is the trouble, that would not release the second mortgage and they are not most likely going to just give you the lien for nothing.

The best thing, talk to the 1st mortgage company, see if you can get them to foreclose with an agreement to buy it from them after foreclosure.
With a first and second mortgage there is almost nothing you can do, unto they foreclose, The fact the loan was "charged off" has no bearing on this at all.