First SS, Please Help!
Hi all,
I need some help on my first SS. First of all has anyone ever done a SS with JP Morgan Chase and how are they to work with? Also, this homeowner has a very sad hardship. The comps in the area are between $350k to $380k. The house needs about $80k worth of work to bring it to marketable conditions and the payoff amount is $297000. Is this worth a SS and if it is, how much should I start my offer at. Thanks so much for any input on this one. Thanks again.
I have never done a double closing...but (someone correct me if I am wrong) I believe that you DO NOT need the money in a double closing situation. You will use the money from the new buyer to pay the seller and basically everything gets settled in the second transaction. Hopefully someone else will chime in and confirm/correct me on this.
I think Brenda is 95% correct...
The issue of seasoning is about the buyers credit and the lender they are using... Because they have a marginal credit score they may be using a Sub "A" lender already who doesn’t have a seasoning issue. Find out.
If they are using a lender who requires seasoning find out what it will cost the buyer to go to a non seasoning lender and pay the difference on the loan for a 5 year period..
Example the difference between 6.5% and 7% on 80,000 over 5 years is only 1595.40.. Well worth paying to make the deal happen...
The bigger issue may be buying the property before your contract expires... You have sufficient equity to get a HM loan.. Try and find a HM lender who has a "pay me back within 21 days" Loan and there are no any cost to you except title and escrow fees. Most HML have these programs...
Good Luck
[addsig]
The only way I know to flip a SS to a retail buyer with a mortgage is to deed the property into a land trust, have two huds at closing (one for the SS lender and the real HUD for the mortgage company ), and lie to the SS lender. It is not pretty but doable if that stuff does not bother you and you have a closing agent that will produce two HUDs. This is also the only way that I know of to market a SS on the MLS to get a buyer while you are still working with the lender.
The land trust allows you to be the owner, so you can sign P&S contracts and MLS listing agreements. The land trust also gets by any seasoning issues the mortgage company might have because it looks like the original owner just did it for estate planning purposes. The mortgage company does not know that the equitable interest in the property was transferred to someone else.
bgrossnickle,
This is getting good. The investor that I spoke with did mention that there is a fine, but legal, line to follow when you do these types of transactions. He even said that at the boot camp they mention that most investors have no clue on how to do so. It sounds like you know what he is talking about. Bgrossnickle, what are the rest of the drawbacks?..... and might their be a piece of the puzzle or loophole that is keeping it a clean deal? Thanks again. Lay it on us.
ibuyhousesinc,
You have a lot of good points. Just get the deal. I have never seen that HM program that you mentioned. But....I never asked. What do they gain from the 21 days payback scenario? Everything I see is 7 points up front and 18%. Thanks again.
give you almost free money for 21 days
[addsig]
Thank you for intelligent responses and concern. To begin with a short sale is legal now. This law states that a distressed situation must be at 82 % of FMV.
Any way around this is circumventing the law and it becomes a possible crime!
The idea is that the investors get out of the market as there is no real incentive to invest so much for such a small return. One could get a similar no risk return on a bank CD.
I agree w/ short sale pro. Go to that sale w/ the intention of buying.
If you are going to go w/ the homeowner and you feel like you have to let him stay... at least go out and get a new loan dont take "subject to".
By the way if you get control of the 2nd position I believe you are able to cover the borrowers back payments and initiate your own foreclosure. In the Garns-St.Jermaine Act of 1984 or 86 it mentions the rights as a "secured creditor" on the property. If you were to take over payments and initiate your own foreclosure you could control the property that way also if the owner will not play ball.
Good luck and Good deal!
I know a lot of investors would recommend never letting the person stay in the house. But I’ve done it before, and I might be inclined to do it again, if I was in your situation.
I would want to know more about the seller and the foreclosure laws in your state. But this way it would be a sure deal with a fixed price. You would have no marketing costs, no holding time, etc. Going to auction, the outcome is still an unknown.
I guess a lot also depends on what your longer-term intentions are. But here are just a couple of thoughts I had.
I would definitely get a new loan. But I wouldn’t give him $10K cash -- unless a portion or all of it was in a reserve account to ensure his rent payments. Or, I might give him a $10k second on the property. That way he still has a vested interest in the home, no matter what happens. And it’s an incentive for him not to trash the place if he’s forced to leave down the road.
If you wanted to put him back in on a L/O or CFD, you could also do the new loan for a higher amount and get cash out now in the form of his Option Consideration. Just up the Option price by that amount and credit it back.
Just a couple of alternative thoughts.
Quote:
On 2005-10-27 11:56, mvm wrote:
mcole,
I would have considered leasing it back to the homeowner,but after speaking to him, it really sounds trouble to me in dealing with him. When i asked him to sell it me, it demanded me to lease it back to him for 1200/month with a purchase price of 360k, when he knows that the FMV is 430k.
Thanks for your input.
Mvm,
I understand completely, and think you’re making the right decision.
As I mentioned, most people would recommend against it. I’ve done it and it’s worked okay so far. But I’ve pobably been lucky. And I certainly wouldn’t make a habit of it.
By the way, nice deal!
: )
MVM
Please let us know if you are successful in buying the second. I have not had any luck in buying the note.
Brenda