Dead Mortgagee-No Probate Estate

I am looking to buy a short sale in Colorado. Mortgagee has been dead for almost a year. Property is in preforclosure. No will and no probate estate has been opened... family indicates they won't in the future. $98000 on the 1st owned by PennyMac. 22,500 on the second lien owned by local bank. Local bank is happy to negotiate payoff of 2nd.

My concern is will there need to be a probate opened to sell this property as a short sale? I do not want to wait 6 mos or more to acquire.

If this deal is feasible what docs need to be included with an offer to the 1st lien holder.

This property is worth maybe 150,000 as it stands. Would anybody touch this deal with a 10 foot pole?!!

Thank You!!!

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Permalink Reply by Smitty on July 26, 2012 at 7:42am

I don't see the need to do a short sale if the property value is worth $150,000 and the amount owed is $120,500.   Why can't they just sell it as a traditional sale.

 

Also, if you can't wait "6 months" for a short sale, I'm not sure a short sale is right for you.  Some take much longer.  It's not the same as a traditional sale.

Permalink Reply by Jay Canode on July 26, 2012 at 7:52am

Property is in preforeclosure. I'd like to get it at a discount before the auction. Anybody know anything about probate requirements when no probate estate has or will be opened by heirs?

Permalink Reply by Jeff Payne on July 27, 2012 at 4:11am

Why would they sell it at a discount?  If it is worth 150,000, the bank will take it back, wipe out the second lien and sell the property

Permalink Reply by Jay Canode on July 27, 2012 at 11:11am

Everyone is missing one detail. I have negitiated payoff of the second mortgage. Once I foreclose on the second I will have deed to the property and be required to pay off the first immediately, thus getting me insurable title to the property. Auction date for 1st lien is in October, auction for 2nd is in August. Has anyone done this? And if so were you able to negotaite payoff of the 1st lien?

Permalink Reply by Nathan Miller on July 30, 2012 at 7:13am

If you pay off the 2nd, there is no 2nd for anyone to foreclose.  Do you mean you have negotiated a PURCHASE of the 2nd mortgage, or do you really mean payoff?

Permalink Reply by Jay Canode on July 30, 2012 at 9:39am

Nathan, 2nd is currently under preforeclosure. I pay off the second THEN foreclose on the second and take title, Then payoff the 1st and take marketable title. My quandary now is NO one will give me a payoff figure for the 1st. The Mortgagee is dead and his family is estranged. Clearly a deal could be made but the system is not set up to facilitate one.

Permalink Reply by Kathy Fuhriman on July 29, 2012 at 4:47am

If the buyer-Jay- acquires the property through a trustees sale on the second subject to payoff of the first the former owner, now deceased, or his/her estate would have no further interest nor transfer rights to the property. Foreclosure wipes out all of the former owner rights correct? So why would probate be required? All that would be left is the unsettled debt of the first lien.

Permalink Reply by Ricky D. Ostrom on July 29, 2012 at 1:56am

I would offer to buy the note from PennyMac at a discount and then foreclose on the property, wiping out the second.

Permalink Reply by Marcy Moyer on July 29, 2012 at 4:34am

This does not sound right. If there is equity in the property why is it not being sold? Why have the heirs not opened probate? Is there anything else in the estate? Every state has laws about what happens when someone dies. If there is no will the creditors are paid off first and then the heirs get the rest based on the formula of that state. If heirs can not be located then the state get the money. So why has the estate been left alone? I am not familiar with Colorado laws, but in Ca. you could not do what you are trying to do. Nothing can happen to a dead person's estate without approval by a probate court.

Permalink Reply by Jay Canode on July 29, 2012 at 9:32am

Its really a break even deal in terms of equity..especially if a realtor gets involved. The deceased owner had a pile of medical bills and the family, also estranged, wants nothing to do with anything, thus they have not opened probate. I see value in the property and I also live down the street. I am Looking at it as an income source. Greg, i would not be buying the note from Pennymac, but paying off outstanding balance. My biggest unknown now is the loan payoff amount from Pennymac. They will not give me those figures until I have deed.

Has anyone ever tried to acquire property in this manner> I.E. Buy the 2nd lien, foreclose, pay off the 1st, get title.

If I let it go, the lender on the second will do just as I have planned and hand it over to a realtor as REO and jack up the price $30k. 

(Thanks for all your thoughtful responses BTW!)

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