Can I take Over Payments to Buy Pre-Foreclosure?

“Dear Wendy,
I want to buy a neighbor’s house in pre-foreclosure. Can I to take just take over his mortgage payments?”

This investor emailed me to ask me how he could go about becoming the owner of the house.  The Destin, Florida area property was not listed for sale, and the buyer had just found the info through public records.

Here’s what I wrote:

If it is pre-foreclosure, the owner is behind in their mortgage payments. Their lender may have offered them a temporary reduced payment plan, or a period to catch up (*called forbearance).  Normally, to assume someone’s loan, that must already be stipulated as a possibility in the person’s mortgage.

It’s not common to have an assumable conventional loan, but it is a possibility for VA or other government loans.  In that case, the new (replacement) borrower would still have to go through the loan qualification process.  I don’t see that as a likely scenario for these owners to get bailed out.

The other option is for you to offer to just buy the property from them. Go directly to the owners and make an offer.  If your offer is enough to cover their mortgage and closing costs, then maybe they would consider it. 

If it’s less than their payoff amount and they want to accept your offer, it would be a “short sale”. Normally a lender won’t take a “short sale” without the real estate being placed for sale in the open market with a licensed real estate broker and exposed so that the lender knows top dollar is being pursued.  The lender may also have an appraisal done.  I am sure there may be some exceptions, but I have never seen that.

Do you have more real estate questions? Do you need to sell because you cannot make your mortgage payments?

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