Land Contract on a Foreclosure in Redemption Period?

[07sky04]

There is a home that my DH and I LOVE - it is our dream home.  Unfortunately, we have some baddies on our mortgage the past year and cannot obtain a mortgage for the house.  We have clean credit otherwise (no lates, no collections, etc). 

We'd like to secure the house using a Land Contract for the current selling price of $200K as a short sale.  The home is in the Pre-Foreclosure stage and still in the Redemption Period which ends in February.  The amount needed to redeem the property is $286K.   

Someone recommended going the Land Contract route and I'm curious if any of you have any insight as to whether or not the bank will accept a Land Contract on a pre-foreclosure.

Thanks!!

[Anonymous]

A bank is highly unlikely to accept a land contract.  Not to say it could not happen, but they just want rid of the property for two reasons.  One is to clear their balance sheet and the other is for liability reasons.  They will be very weary of a land contract due to the fact that they remain liable for the property and upkeep until you take ownership, as well as the strong possibility that there may be problems financing the house down the road.   They would be more likely to either let it go to foreclosure auction and/or sell it cheap to an investor who has cash. 

A seller could agree to a land contract on a property if they are not yet into foreclosure, but your rent payments would have to be enough to cover the mortgage that they have on the property and upkeep.  Considering that they probably bought it in the peak and have a bad loan, this would make it very expensive.