Brainstorming - Need Quick Advice!!
I found a place that the lady who called me is being foreclosed on, on the 11th of nov (less than 2 wks!!). she is behind 25K on her mortgage and (of course) she is willing to let me take over the property immediately. i'd love to be able to help both of us out if possible. nice older lady and nice house - i already drove past it tonite (about 1 am).
in her neighborhood, homes go from 150K to (some as much as) 500K. her's should be in the 200K arena - nice chunk of land. i'm not sure yet, still researching, what is left on the note - didn't get to that before she had to get off the phone (i'll call her tomorrow for more info) - but i'm trying to think of ways to get her place without the 25K to catch her up and stop the sheriff's sale.
i realize i have little background on this place yet, but i'm starting the research on it now. i kno she has a nice chunk of equity as well, since she's been in that house for about 10 years. this could be a great first deal for me, but as i check it out, i want to get the topic out there for feedback. i have no time to wait!
any advice on approaches would be more than appreciated. i'll post more tomorrow as i find out what's left on the note and if it's clear of other liens, etc ...
thanks raj. the only thing you didn't have right (and i may have explained it wrong - please remember this is my first chance at a deal, my terminology could be ignorant at times, haha) was that the 169k was what was owed total on the loan - balance + back payments ... so the only thing to add was the 20k of taxes. that's why i said 189k would even everything off. she has no judgments or liens against her or the property either.
also, her boyfriend is a contractor and i got the tour last night of her place. i do a little of that too, enough to know good work. the house is in good shape - i may replace a few ceiling tiles in the basement and paint thier putred choice of colors upstairs. other than that, it's ready to rock.
so, if i short sale it, am i correct in sayin that i just want to show the bank that she can't pay and won't pay and prove that they may not get all back fromt he sale that's delinquent? then offer them .80 on the dollar for the note?
i'm only asking because i don't have enough time to really try to go get read-up on them in the forums. if i have a goal, i kno a lot of real estate attorneys who could help me with the language.
Dear Jackman,
Most important, unpaid balance on that mortgage. You must have an equity if you are to play. Post imediately upon receipt of that information. Then check back taxes and bal delinq on loan and costs of foreclosure. Nov 11, that's nice Armistice Day. Get the story from her as to what happened to cause this problem.
Cheers Lucius
ok, she won't get off her phone. i have yet to get thru today, but in my research last night, i found out a bit about it. to me, it kinda looks like not so much of a good deal. but it is a great case to work on to learn to stretch my creativity. hehe. if i can fenagle it somehow, it would probably make sellers who are current on thier note, look like a cake walk. oh, her story is just that she hasn't been able to really afford the payment since her husband died and just never did anything about it. also, her *new* boyfriend told me that the bank will sell for what is delinquent. i have no clue what that means. i don't think he knows what he's talkin about. i doubt the bank would sell it in that neighbood for $25k that she's behind - when they could get over 150k.
she told me herself, she was about 25k behind total. i see the deed for 127,000 in april of 1993, subsequent mortgage for 127,800 - then 2 other mortgages in 1999 and 2000 for 145,600 (the first was obviously a refi, but i don't know what that second means at the same value - it wasn't noted as an assignment and i didn't pull the document). the eerie part to me, is none of the mortgages show to be satisfied. so does that mean she's refi'd and didn't pay off the old loans? that's terrible. she's delinquent 2002 taxes - 5229. house hasn't been reassessed since 1998 and was 148,730 then.
it's a 1720 sq ft ranch with 97 feet frontage and 11000 sq ft lot size. home built in 1950 and still in very good condition, i've been in it before.
once i get thru to her today, i'll find what the amount of default is and what is owed and post immediately.
thanks lufos for your quick input! also thanks in advance to anyone who pitches in - hopefully not the "let this one go, dude" line. <IMG SRC="images/forum/smilies/icon_biggrin.gif">
[ Edited by jackman on Date 10/29/2003 ][ Edited by jackman on Date 10/29/2003 ]
When you are spewing out the sour news, the equity position of a future sale is dwindling quickly. So where is the lender, do you feel confident in negotiating a forbearance? When you sit down with her, and your yellow scratch pad, ask her to for clarity.
Mortgage 1 Balance =
Mortgage 2 Balance =
Mortgage 1 payment =
Mortgage 2 payment =
Taxes Paid 2002 =
Who else has she not paid? IRS, contractor for repairs, etc.
$127K balance worth $150K = $23K equity
Out of pocket: $20K in mortgage payments/fees and $6K last years taxes, plus a portion of this years taxes $3K. Total out of pocket: $29K without any new title surprises or additional mortgages. The home appears to exceed the current value of the home. Is there a possibility we are missing something?
Eric & Rosa
[addsig]
classimg: you know, that's what it looks like - like the home exceeds what it's worth. this would make it a sour deal. haha. i haven't gotten to city hall yet to run her name for judgments/liens. i just know what i got from the recorder of deeds so far (online). there are still 3 mortgages on it - only the first pmm was figured in your calculations.
that is what i will do when i speak with her though. i will find out exactly what she owes on all mortgages and foreclosure costs. after this, i'll run to the hall and search who else she owes. i kno she doesn't owe a contractor, because her new boyfriend is one and he's done everything in there - just for a place to lay his head (no dinero)!
If there are 3 mortgages you need to get names and contact numbers for all 3. Then see if you can QUICKLY short sale the second and third at a DEEP discount. Or just pick it up at sheriff's sale for the amount of the first.
Sounds like a perfect candidate for a short sale. Get the info on the MTG holders asap.
Once you do that, go through the house and find things wrong with it. Find some low comps. Get her to write/sign a hardship letter.
Get it to the lenders asap
Consider that the owner may have refinanced a mortgage and the lender sent the homeowner a Certificate of Satisfaction.
If that Certificate of Satisfaction never got recorded, the public records will never show the first lien was released. If this is the case, ask the homeowner if she still has the Certificate of Satisfaction.
dave: yeah i wondered about that, if they just weren't recorded. good point. i'll ask her about that.
boyd and oc: great feedback, but i'm by no means versed in short sales. is it something that i shouldn't proceed on until i learn enough to work it - or is it a simple process that i could flop through without damaging livelihood?
is anyone open to crash course (me) in short sales - like could you give me a quick sample scenario? i learn well from samples. feel free to pm me if you don't want to post it.
also, when approaching the bank, would i need to then show them my credit? i posted this is sub2 forum, because i'm not in the position to get a loan from a bank and i already asked her if she's open to let me sub it, she is open to ANYTHING that doesn't cost her money and she already has her new place to move into.
thanks all, you're helping me so far, tremendously!!
If you take the property Subject To the loan(s), you will have to make up the $25K arrearages. Not sure that there is enough equity in this property to make this approach worthwhile.
Give it to someone who can short sale is and make $$$ on the referral as a bird dog. Someone in here may have some sort of interest. Do the research and find out what's delinquent and post it here in TCI.
Good Luck
With just a few weeks to the sale date you will have to move quickly. First off get a "Authorization To Release Information" from the owner and get it to the 1st lender (Loss Mitigation). Give them a call and see if they are willing to talk. You never know when it's this close to sale date. They have already occurred most of the foreclosure costs. Its worth a try.
Good Luck
Get authorization to deal from her. If there is more than one mortgage, it is alot easier to short sale a second than a first since their going to lose their interest in the house at sheriff sale unless they buy out the first which doesn't happen very often.
ok, i will keep on this until i finally talk to her to get her authorization to talk to the bank and get her mortgage balances. i can't believe she's not returning my call or making herself available, as open as she was to me the first day when she called me. wierd.
i guess i should have the whole thread removed now, since it's no longer a subto question ...
wow, ok. i went to her place today and spoke with her and got a load of paperwork from her. the balance of the note is 169K. she owes 25K in past mortgage and 20K in taxes (5300/yr taxes). she only has 1 mortgage - it was refi'd once then assigned and note was sold after that. so basically just the one mortgage is waht is being paid on. she has payments of 1559/mo at 12% interest (which she doesn't make, haha). OH and i found out that she has an appraisal for 220K, not the 148K that i saw. so ... that leaves me SOME margin.
does this make anything better. basically what i have is this ... total balance on it 169K, 20 in back taxes makes 189 - and i have an appraisal for 220k in 2000 - most likely at least 240 by now. so i'm looking at worse case at 31k as my chance to profit. not huge, but worth it to see if i can make it happen. no?!
Jackman,
Here's all your figures: Loan amount due = $169K, Back payments = $25K (assuming this includes late fees, attorney costs, etc.), back taxes owed = $20K. TOTAL = $214K.
That gives you only $6K or so with the old appraisal. You can't assume that the house will be appraised any higher. Likely, the previous appraisal ($220K) was for the refi and was inflated anyway. There is also the costs of repairs etc. to think about. If she couldn't make her payment, doubtful if she repaired anything either. So the value may well be lower than the previous appraisal. The only way to know is to do comps.
In my opinion, this is not a sub2 deal. First, the interest rate is ungodly high. Second, you'd have to drop $45K just to get everything current. Third, no where near enough equity for it to be worth all of that.
It could be a very good candidate for a shortsale though. Doing a short is not for the inexperienced though. It may be best to get all the info that you can from the bank (ie would they consider a short or selling the note, etc.) and pass it along to a more experienced investor. Tag along with them and watch them work.
Roger