Need help...suggestions
I am an LO for a mortgage broker in upstate NY. I have a client who owns & lives in a 2-unit building but he neither the deed or mortgage is in his name(Actually he has been recently Quit-claimed on the property but has not yet officially been recorded). This is because his freind that owned it previous to him was about to lose the property, so my client agreed to buy him out for $10,000, and make the payments on the property, but the mortgage & deed stayed in his friends name.
Now my client wants to "refinance" the property, but he falls a little short of conventional bank standards. I am looking for a private investor for him who is willing to do a short term loan for him. I have a complete file including, but not limited to.....appraisal, credit, income docs, title.....etc....
Here are a few of the facts:
Appraised value -- $122K
Mortgage balance -- $51k
Middle credit score -- 583(Experian)
Job History(career) -- Florar designer(been with same company 13 yrs)
....and so on...........
His objective is to get the mortgage in his name so he can be rid of his friend, also take some cash out on the property, and pay the $6k in back taxes that are owed on the property.
I don't have any experience with this side of the industry, but I know he is a "very strong" candidate to get a private mortgage, and I am willing to help facilitate(with a fee) him receiving the financing.
Where do I go from here to get this deal done? The deal breaker is the cashout. We feel that the LTV will still be low enough that it will look attractive to a private investor, and the interest earned on the loan should make the deal worth it for both parties. I have discussed with him that the interest rate will be much higher than a conventional loan, and he has accepted this. In all likelyhood, he will conventionally refi in about 18 months.
Does anyone have some suggestions for me?
deadh1,
Wow, what a predicament. How come the deed was not recorded? Once the deed is recorded, then he could get the refinance loan....can the mortgage broker can you find one for him that is a non-seasoning cash-out refi loan? This is the only thing I could think of....
Assumptions:
Friend's name is John
Client's name is Bill
Option #1:
- Have Bill purchase the property from John, in which John will "credit back" money to Bill at closing. You have to have this in writing in the form of an addendum.
- Also, have John agree to pay all closing costs, which will actually be paid by Bill's new mortgage.
- The contract they would enter into would be for $54K (mortgage balance + closing costs) and Bill would get a mortgage for $65K.
- You can say the "credit back to buyer" is for repairs, or a rent-to-own purchase, etc.
- Bill will get the deed and money back at closing. John will be satisfied with the property and mortgage being out of his name.
Now all you have to do is find a title company that will work with you on this deal and have the mortgage broker locate a loan for him. If his credit score is a little on the low side, then you may want to print out some articles on here about increasing your credit score. Here are a few articles:
- Credit 101 by Drifter
- Real Estate Investors-Remove Bad Credit by Derrick Ali
- Investing in Real Estate with Bad Credit by John Michael
Good luck and I hope everything works out for both you and your client. If the mortgage broker cannot accomplish this, then find someone who can help you do this type of transaction.
Tanya[ Edited by tanya1215 on Date 06/21/2003 ]