I have someone interested in a default property, and he wants to put in an offer for the 1st(both loans are held by the same lender). We never got enough time to talk about why he would do this, so I ask the experts around here, and why would the lender take such loss on the property.

Coolguy,

Is this a Short Sale or a Foreclosure?

If it is a foreclosure then there is no 2nd. It would of been cleared in the foreclosure.

If it is a Short Sale, then you will have to get the second to agree to do a total loss. You should aproach the first and see if they would be willing to pay the second $1000 to release (if the first agrees to the short offer.

They have a MORTGAGE INSURANCE payoff and would like to get the non-performing debt off of there books.

Investors can also purchase the 1st mortgage note from the bank but in that scenario you won't ge tpaid so don't mention that to the investor.