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Freeman does not make cash on this. When the house is foreclosed on it becomes Bank of America's property. They will keep any profit.

you're skipping a step, right? When BOA forecloses the house goes to auction. IF BOA prevails at auction (for the note value) and then sells it for market value, the profit is BOAs. If someone else buys it though (likely), the difference over the note goes to Freeman. Problem for Freeman is that an auction buyer is not paying $1.7million, so he will get far less than he would have (or might) if he simply renegotiated the mortgage, which is probably what is happening now.

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