can the owner sell this house? FC advice request. - Posted by RaymondCA

Posted by Jim_MN on July 15, 2003 at 24:11:48:

But isn’t it a bit suspicious for a loan which hasn’t been paid on for a year to suddenly be brought current? Especially when the property has the attention of the bank, since it’s going to auction? I have had a couple of people facing FC call recently, and would love to be able to take care of their problems so simply.

can the owner sell this house? FC advice request. - Posted by RaymondCA

Posted by RaymondCA on July 13, 2003 at 13:06:29:

Hey all,

I have a lead on a possible deal that I could use some expert advice on. I just found out about this yesterday and am still a little shy on details. But my questions are more related to the foreclosure process.

A friend of my mom’s, an eldery gentleman, is in a real ‘pickle’ with his house. He hasn’t made a payment since May of 2002. I checked county records online and a notice of default was filed on 6/25/2002.

I had lunch with my mom and this getleman and he was so embarrased by the entire situation he didn’t even want to talk about it, he actually started to cry. What he did say though is that he had been in court at the begining of last week and told them he is walking away from the house leaving all the junk in it for them to clean out. According to him, the bank said, “whatever, we just want you out”. He was given 30 days to vacate the property.

I have driven by the house and… what a mess!! He won’t let me or my mom inside ‘because the house is such a mess’. I am meeting with him later today and think I might have convinced him to let me in… I am going to help him move his bed to his new senior apartment.

house details:

3 bedroom (apparently one room is an add on that was never permitted)
2 bath (apparently there is some water damage, don’t know how severe)

I have to verify these figures, but so far this is what I have:

principal owed on the house $65,000 (does not include any arrears)

conservative FMV $113,000 (after rehab. house next door sold for $134k in feb 2003)

fix up costs $25,000 (this is a guess, and itentially high…)

My questions are as follows, I have no experience in working with foreclosures and am feeling a little ‘wobbly’:

  1. Can I deal with the owner (the elderly gentleman) at this point? Does he still have any control over what he does with this property? Or do I need to be working with the bank? There is no BK involved.

  2. If I should work with the bank… How eager are these banks loss departments to work with investors? Can anyone reccomend a strategie? Cure the loan and work from there? Get my own financing? The bank has had this one on their books for over a year, do they want to cure the loan or just get rid of it?

  3. Normally what I would do is make an offer, fund the purchase and rehab with my own financing. That whole process normally takes several months though… loans are backed up becuase of all the refies going on and I don’t know how much time I have to close this deal.

any other suggestions, recomendations, thoughts or ideas you may have.

RaymondCA

Re: can the owner sell this house? - Posted by Tom-FL

Posted by Tom-FL on July 13, 2003 at 23:02:09:

Well, you say the 25k repair is a guess, and a high one at that. If it turns out it needs more cleanup than repair and you can get by on 5k, you should be okay.

My views - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 13, 2003 at 17:35:48:

Raymond–(CA)------------------

This does not make sense. …"he had been in court at the begining of last week … . " Yet you say he is not in BK. This is a contracdiction as almost no foreclosures are judicial foreclosures, especially not on SFRs. Screwy.

There is not much here is there? You are saying it will cost about $90K to buy and fix and then resell for $113K? Maybe you are being too conservative with your figures? Realistic figures always are more interesting to me. If these figures are correct there is not much for you from a rehab buyer.

I’m more inclined to say get the deed and bring the loan current. Rehab and then resell. That way you don’t have to borrow too terribly much to get into the property. And you could start fixing up before you got all the rehab money together.

If the lender will allow some time, fine. But, I guess I don’t see the need if you can get together the money to bring the loan current.

Good Investing*********Ron Starr***************

Re: can the owner sell this house? - Posted by Neill

Posted by Neill on July 13, 2003 at 14:06:22:

Raymond - First of all, there IS a deal here. How you handle it depends on what you want to do with the house.

First scenario - Make him an offer for the balance on the loan… or you could go up to $70K if you’d like to see him get some cash out of the deal. In the offer specify Raymond and/or assigns. Add $5000.00 to the price and assign the contract to an end buyer who can close rapidly.

Second scenario - Buy subject to the first trust deed, bring the loan current, and do the rehab yourself.

If you’re in California, shoot me an email… I may have some other options for you.

Neill