Posted by DaveD (WI) on April 13, 2007 at 20:29:00:
LOL indeed. Dude, I was just giving you stuff… As usual, you have it covered 17 ways from sideways. I’m impressed, big time, but not surprised. I’ll buy you one next time JP and Terry do a convention. Just promise me you don’t imbibe the swill (Bud) that is all our friend Phil F. knows 
Anyone experience sub-prime fall out? - Posted by Tim
Posted by Tim on April 12, 2007 at 14:33:49:
Hi,
I was just wonder if any of the flippers here have any problems with your buyers getting funded now that there has been a sub-prime meltdown.
Tim
FHA loans - Posted by JT-IN
Posted by JT-IN on April 12, 2007 at 16:38:03:
Are the new and maybe the only sub-prime loan left.
I am closing one tomorrow. This is a new house, and the seasoning requirements have been met. Otherwise, 6 month holding period may become standard, unless selling to a person of means, who can command a bank loan secured by other assets, or is otherwise a very low risk borrower.
Re: FHA loans - Posted by Ken-Orlando
Posted by Ken-Orlando on April 14, 2007 at 19:29:06:
Check out Acorn.org and contact the office for your State to find out what bank is sponsoring their funding to finance or refi your buyers.
Here in Florida, Bank of America offers the Acorn progam: 100% financing at 6.25% as long as your buyer has as I recall a 550 credit score and makes no more than $55,000 a year. These loans are only for your buyer who will live in the home and is not offered to investors.
This is a great way to refi any mortgages you are holding with balloons that are coming due to finance your buyer.
Re: FHA loans - Posted by Ken-Orlando
Posted by Ken-Orlando on April 14, 2007 at 19:28:07:
Check out Acorn.org and contact the office for your State to find out what bank is sponsoring their funding to finance or refi your buyers.
Here in Florida, Bank of America offers the Acorn progam: 100% financing at 6.25% as long as your buyer has as I recall a 550 credit score and makes no more than $55,000 a year. These loans are only for your buyer who will live in the home and is not offered to investors.
This is a great way to refi any mortgages you are holding with balloons that are coming due or finance your buyer.
Re: FHA loans - Posted by Kristine-CA
Posted by Kristine-CA on April 12, 2007 at 20:58:09:
Hi JT. I’m curious about your buyer’s FHA loan.
How subprime is it? Was their credit score above 700? Just kidding.
How much down? What kind of terms? Credit score?
Wondering how much FHA is extending themselves, if at all, given the
all the subprime drama. Thanks, Kristine
acornhousing.org - Posted by Kristine-CA
Posted by Kristine-CA on April 15, 2007 at 14:31:32:
Ken: thanks for the link to the acorn.org. I was unable to figure out
how to get to the lending program info from the home page. After
some research I found acornhousing.org, which had everything about
the program.
I’m surprised I never heard of this program before. I am looking
forward to checking it out when I have a qualified buyer. Thanks again
for sharing the information. Sincerely, Kristine
Re: FHA loans - Posted by JT-IN
Posted by JT-IN on April 12, 2007 at 21:21:44:
Hi Kristine:
The score was around a 566, if memory serves me right. The way the deal came about was, I was advertising for a L/O tenant on this new house, due to no takers otherwise. Had some good candidates apply, and the ultimate buyer seemed do-able on a straight out deal.
They were skeptical, because they have been told that before, only to later be turned down flat. So we inched along the slippery slope and low and behold we made it. The details are this… they own a MH outright, probably worth 5-8K, situated on a lot in a park… Have some major cc debt that is under an agreement plan with a third party… reduced interest and inflated payments. Those are not usually good, but they have made those payments like a clock over the past 13 months. 2 car payments, and those are good pays. They both make good money, totaling about 85K to 90K per year. (keep in mind we are talking the heartland here, not CA. That amt of $ will buy lots of groceries here).
Purchase price of 200K, new 1600 sq ft ranch house, full basmt, 2 car garage, pond, on 3 wooded acres. They have no money in pocket, so I am paying a 3% giufted DP, and 4K of their closing costs. Also purchasing the MH for 7500 cash at closing. They will walk away from closing with 5K in pocket and keys and garage door openers. They are super people and are absolutely tickled to death over this deal. They couldn’t be happier if they had won the Lottery, in fact, in their minds, they have won the Lottery, and didn’t even need to buy a ticket. All they had to do was call on the add, and it was a toll free number… LOL
So that is that. A Win-Win deal… it seems. No other lender would have come near this deal… of course I would have done the deal personally as a L/O deal, if we hadn’t been able to secure financing… however, I much prefer this route. Making plans to build a couple more up on the hill now… he-he.
JT-IN
Re: FHA loans - Posted by ski
Posted by ski on April 18, 2007 at 19:53:35:
Let me get this straight. They come in with no money down and walk with 5k at closing. What am I missing. I reralise that they are GOOD people, but what do they have? They have a house with nothing down. They have 5k in cash. What do they have to loose if they stop making payments the first month? the answer isd NOTHING. If they have all this stuff and you have nothing except a good feeling what if… they do not make a single payment. You will start foreclosure proceedings. The final judgement will take about 8 - 10 months. Within this time they will make zero payments and will probably trash the place. Now what do you have? Consider what you are doing. Not all people are a++holes, nor are all honest. BEEN THERE DONE THAT.
Re…I thought - Posted by Christen
Posted by Christen on April 18, 2007 at 15:08:36:
I think I am confused. I thought that you had to have a 600 middle score to qualify for FHA, which is written in stone. Has it changed over the last 3 yrs, or was I misunderstanding from the beginning?
Re: FHA loans - Posted by Anne_ND
Posted by Anne_ND on April 13, 2007 at 16:55:49:
Hey JT, welcome to the world of Lonnie dealing!
If you need any docs let me know.
Thanks for the very interesting details on your win-win deal. I’ve got some houses for sale in a slowing market up north, and thinking outside the box is definitely what is going to get them gone.
take care, Anne
Re: FHA loans - Posted by DaveD (WI)
Posted by DaveD (WI) on April 13, 2007 at 09:02:56:
No other lender would touch it? Maybe. Maybe not. Don’t kid yourself, JT. What made the deal work was your willingness to gift the 3% down, plus pay the closing costs. Even though it is “free money” out of your equity, still not an insignificant chunk of change. Brute force (aka “cash”) has a way of helping things along. Nice deal.
BTW, you probably overpaid for the MH, but I’m not Lonnie
Re: FHA loans - Posted by Kristine-CA
Posted by Kristine-CA on April 12, 2007 at 22:29:55:
Thanks so much for sharing some of the details. It’s very inspirational
to read about win-win deals that get people into homes they want AND
can afford. BTW 90K a year buys lots of groceries in CA too. It just
doesn’t buy much housing.
Given the current situations in the Central Valley–more on the market,
prices falling, etc., I’ve started looking at other types of deals. I’ve
started making sub2 offers. These aren’t borrowers with subprime
loans, but rather borrowers/owners who re-fied to the max at the
height of this boom. As you know, I don’t go looking for these. But
my general marketing sometimes produces callers who are ready to
walk. I’m also running into heirs/executors dealing with large mtg.
payments on properties with declining values.
What this means for me is that I’ll be putting end users into the houses
for the first time via L/Os and hopeuflly some via FHA loans. I am so
ready for the change!
Thanks again for sharing a happy story. Kristine
MH price - Posted by JT-IN
Posted by JT-IN on April 13, 2007 at 17:59:33:
Dave:
In putting the deal together, it was a forgone conclusion on my part that I needed to buy their home for the amount that they stated it was worth, even knowing that it is not worth that amount. Kind of like a car trade; I got my price and they got theirs, so we are both happy. I would turn around and sell it today for a loss, just to be done with it. I made my money on the new home, not on the MH transaction. It just had to be what it had to be…
However, I guess the MH deal isn’t too bad at that cause the lot rent is only 160 per mo and I have had numerous folks who know that I am buying it from them who want to rent it for 500 per mo. Not counting maintenance, etc, I guess that would come to more than a 50% cash on cash return, as pure rental. I will surely find someone to do a contract type deal or a Lonnie deal with, except that may not be as profitable as renting it… My other thought is that I will move it from the park onto an acre or 2, then sell it for 75K, or so… We will see how that unfolds.
I really just want to be rid of the bucket of bolts… Back to the point of the price versus value… I’ll tell you how worried about that part of the deal I was, I still haven’t even walked up to the door step of the place, never stepped foot inside. They are painting it up inside, and it is a 3BR, 2 bath unit, so how bad of a deal could it be…? My pos c/f at 340 mo is better than some of my brick and mortar deals… maybe I should rethink a thing or two on the MH’s… LOL
JT-IN
Re: MH price - Posted by Kristine-CA
Posted by Kristine-CA on April 13, 2007 at 21:05:48:
It’s interesting that others noticed the MH purchase in your description
of the transaction. I just assumed that the 3% DP and MH purchase
were the cost of doing business on the deal. I also assumed you might
just give it away. If you actually sell the MH or rent it, that it would be
gravy.
Funny, the different perspectives. I’m not privy to the numbers on the
deal, but I’m guessing that DP gift and MH purchase were well covered
in your estimates of what it might take to sell the house in your
market? Kristine