When a house goes into foreclosure the bank has to do something with the property. Typically they will have an auction on it and sell it for 60 to 70 percent of what it’s worth. That is not good for them, so if someone is about to foreclose on a property they will negotiate a sale for less than what is owed or a “short sale”.

You can’t do a short sale, but a third party can.

If you can afford to take over the mortgage, then you can have them do a quit claim deed into your name.

The normal monthly payment on a 200k debt at 6% is $1200 on a 30 yr fixed.

If they’re paying 2k a month, I’ll bet they came down from a much higher loan amount (say 375k). Is this correct?

If so, just refinancing the home (provided they are paid up on the loan) will drop their monthly payment.

IF they got a 200k loan with a monthly payment of 2k, they’re getting ripped off big time.

There are several options in this case.

You could buy it from them at the 200k. If you’ve got better credit you can get a better loan rate.

Refi the loan info a long term fixed loan; 30, 40, or 50 year fixed. This might be difficult if you’re sitting at a 100% Loan to Value ratio.

Talk to the lender and ask for a partial loan forgiveness and refi. This has tax consequences, but could save their home.

But the first thing I would do is look at their mortgage, Something seems fishy. Part of what they’re probably paying in PMI. I’d suggest spliting their single large loan into an 80/20 split (two loans) thus droping the PMI expense.

I’d like to dicuss this more in depth with you, so feel free to drop me a note via yahoo.

Don’t even think about offering the lender a price for less than what it is worth. That’s a short sale, and they will balk immediately when the discover that you are a child of the owners.