What are the steps to, and costs of, the foreclosure process if I purchase a distressed note at a discount?

UPDATED: Sep 20, 2010

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What are the steps to, and costs of, the foreclosure process if I purchase a distressed note at a discount?

I am in the due diligence stage of the possible purchase of a distressed note at a discount. The current owner is about a year behind in payments, and is not willing to do a deed in lieu of foreclosure. The note holder would like to sell me the note at a discount, and I would then need to foreclose on the owner. What are the steps to this process, what are the costs, what is the time frame? Should I speak with a real estate attorney? In Washington County, MD

Asked on September 20, 2010 under Real Estate Law, Maryland


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Definitely speak with an attorney first! Every situation is different, so there's no way to effectively generalize. That said--

1) If the homeowner doesn't contest the foreclosure, the actual foreclosure proceeding might be only a few thousand dollars (court, filing, lawyer, recording, etc.)--but if he does contest it (such as by claiming he's made payments or the terms of the note are different), now  you're into real litigation.

2) Similarly, if not contested, it's probably a few months. If contested, it could drag on and on.

3) Before doing anything, you need the note and situation reviewed by an attorney, to see what the legal rights and obligations are; you need an accounting made, to know what still  has to be paid on the note; you need an appraisal of the home, to know what it *should* be valued at; and you need to do a title search to see if there are other notes, liens, security interests, etc. on the home which would prevent you from getting good title.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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