Subject to from hell ,, collect rent as long as I can a way to recoup investment

[isacaro]

My question involves real estate located in the State of: Massachusetts.

Hi, a friend of mine got involve in a property with a desperate homeowner who didn't want the house anylonger. He accept X amount of money from my friend. My friend fix up the property and with the help of the mother of the kids of the previous homeowner., my friend was able to modify the first mortgage. Since this happend, my friend has been paying every month the amount agreed to first lien holder. The previous homeowner had in the past a HELOC with BOAf. My friend didn't know about it. With the lady ( Mother of the kids from previous homeonwer ) she was able to talk to the HELoC department and she was told that they will write off the HELOC., Now, this HELOC is with a collection company. Will my friend the one on the deed have a problem if he does not pay the HELOC. He is trying to settle with not luck yet. Will the lien from the HELOC dissapear over the years. The house is totally underwater.

Now, my friend repaired the house and spend around $ 35 K.,The house is fully rented and there is a little positive cash flow of $ 550.00 monthly  After the first lien holder was modified, my friend continue doing the payments. Now, the first lient holder find out through the insurance agent that the insurance policy was written under my friend's name not under the previous homeowner. The insurance agent called my friend and questioned why this happend. My friend just told her that he was helping the homeowner in disttress. The insurance agent just added the previous homeowner as a C0-insured

My friend is thinking it will take forever to recup all his money, he rather stop paying the first lien holder, continue collecting rent until foreclosure procedures starts and do a short sale after with another buyer.

What do you think ?,, please advise, I need your input

Thanks,

Isacaro

[JR_FL]

Well your friend made a bad deal from the begining by not checking title good enough. He took it subject to and should honor all terms of the agreement even though the seller did not disclose. it is these types of deals that when they go bad they hit the press and makes it even harder for the investors. Now I am confused when it was stated that the debt was written off. If that is the case then the deal is done. Collection company should not be involved with a debt that is written off.

I would ask the collection company to please send verification of owner ship of the debt and also if its written off then someone needs to bring a release that needs to be recorded against the property.