Cousin Almost In Foreclosure, How Can I Help?
My cousin can't make payments on her new husband house and her own house. His is scheduled for foreclosure in december. Here are the details:
[LIST]Loan amt: $105,385
schedualed payment: $3096
Value: somewhere between $120k and $150k but I think about $140k
Rate: 9.5% (he has a bankruptcy on his record)
Needs about $5k in repairs.[LIST]
My dad has a HELOCof about $85k which obviously isn't enough to buy it from them (they want $120k)
I thought we might beable to assume the loan and refinance it then use the HELOC to do the repairs and talk them down a little on what they get.
Another idea was to keep it in their name and pay off the forclosure yada yada and do the repairs with the HELOC then sell it in their name (to avoid all the closing costs and capital gains tax) is their anything unethical/illeagal about that? is it safe to keep it in their name? what sort of contract would we use? Can they quit claim the property to us while they still have a mortgage? Thanks for your advice.
Josh
[addsig]
Sounds like a Great opportunity for a Sub 2 deal! I would recommend John $Cash$ Locke's book. It is a comprehensive step by step plan on how to do a sub2 deal.
First the seller is going to have to come around to the facts of life. They want $120k + 3k, catch up, + 5k, fix up + 7k, realtor, for resale = $135,000 for a property worth between 130 & 140. "I don't think so." Use $Cash$'s yellow pad to work the deal.
Good Luck!
In this case, I'm wondering if the traditional route rather than a creative solution might be worth considering.
Sounds like they can't afford the house and need to move somewhere less expensive. Why don't they just borrow the money to bring the payments current (probaby from family, but do the paperwork to have the loan secured by the house) and fix the place up, then put it on the market?
what about back payments, taxes, and fees???
If the 1st is $105K and they're 5 months behind, then there's $15K. He's dreaming if he wants you to bail him out AND walk away from it with some money.
Make sure you're getting the whole picture and looking at it realistically.
How far away is the auction. If it's in the near future, he's GOING to loose the house, have a foreclosure on his record, and walk away with nothing. You're being generous if you offer him $3000 "U haul money" and prevent the foreclosure.
Most sellers have to have this spelled out for them because they don't see it naturally. My guess is that it will be even more difficult telling a family member that without him thinking that you're out to take advantage of him.
Are you doing this to make money or to help him? Make sure you know what your motives and your expectations are going into the deal.
If they were not relatives, I'd lend them $13,000 secured by a Note (due in 3 months) and Deed of Trust that Blankets both houses. They can bring current, fix-up and sell at reasonable price and get you paid off or you will wind up owning both houses.
Hibby
The back payments are 3k. And I am definatly going to make a profit or I'm going to tell them to get on the stick and sell it themselves. I think they could.
It is hard to tell a family member that they wont get anything and he dosn't see a forclosure as so bad next to his bankruptcy. The bank doesn't want to short sell either. the guy said they don't do that but I didn't press the issue.
The bank always says that prior to actually foreclosing....+