I was offered a seller-financed mortgage to buy a house. The seller still has a loan through her original bank bank. Unfortunately the seller became late in her payment and I recieved a foreclosure notice in the mail. I tried to contact the orginal owner and never got a reply back. I had continued to pay the loan payments to the seller but it appears she has not been paying it back to her bank. What should I do? Should I talk to my lawyers?
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A: Contact your lawyer as soon as possible. If you do not have one, find one today! The lender has the right to foreclose on the property and you may lose everything you have put into the house as well as the house itself.
When you buy a home with seller financing, you need to make sure any banks with the mortgage on the property receives loan repayment owed on time and monthly, furthermore, he has to make sure that the insurance is promptly paid. Even more important, make sure to pay government, state, city property taxes without being on arears. Having outstanding amounts or becoming late in your payments can be disasterous.
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Your contract with the seller (original owner) may have some contract points to guide you with your conversation with your lawyer. You may be still able to make your loan repayments directly to the bank instead of making payment to the seller. You might have to pay the missed payments but probably wont have to lose your house. You need to find out how how much the seller has owed on the mortgage.
The difficult part is if the original owners payment is higher than the payment you make to the seller. It that case you might want to consider letting the property go into foreclosure.