Can this deal work? - Posted by Jamie

import · January 29, 2001, 6:22pm

Posted by phil fernandez on January 30, 2001 at 08:33:23:

Good heads up Stacy. Yes and then there is the $6,500 or so in back payments,penalties and interest. Forgot about them. LOL

import · January 29, 2001, 6:22pm

Posted by Jamie on January 29, 2001 at 19:22:32:

Hi everyone,

I just received a call from a desperate seller. Here are the details:

3 brm - 1/1/2 house.

Value: 145,000-150,000

Loan Balances (1st) 118,800 - 9.5%, 15-year ammortized
(2nd) 52,000 - 13.5% - 15 year ammortized

Monthly payments: $1,300.00 - 1st Loan
$ 660.00 - 2nd Loan

Seller is 5 months behind, but he states that Banks may be willing to discount. He also would like to stay in the house as a tenant. I know that the debt exceeds the value of the house but is there anyway that this could work for me? He is very motivated. He needs debt relief ASAP. The seller is able to afford approximately $1,100.00 per month.

Any other details that you need to help with me with this, please let me know.

All advice will be greatly appreciated.

Thank you,

Jamie

import · January 30, 2001, 9:35am

One way - Posted by Bud Branstetter

Posted by Bud Branstetter on January 30, 2001 at 10:35:04:

One possibility is to get an option. The first should be starting the process of foreclosure. Go to the second and see if it can be bought at a discount(especially if it is a private second.) Be sure the second knows they will get wiped out in a foreclosure and when it is. Until you get a commitment from the second in writing you can’t really do much. Maybe the first will also discount but it is less likely. You can do any marketing you want if you establish your profit and what they will have to discount to. What you do not want to do is put money(more that $10) up front on a deal that may not fly. You are unlikely to get an investor interested so you will have to get a retail buyer. The other thing is not to let the person stay there. If they can only afford $1100 they need to move on with their lives and into something they can afford.

import · January 29, 2001, 9:56pm

Very small chance if… - Posted by George

Posted by George on January 29, 2001 at 22:56:50:

Let’s see value $150,000
1st 118,000 9.5%
2nd $52,000 13.5%
Total $170,000 in loans

You better look for another deal except…

If it was my deal, and the property was marketable, I would keep this property on the back burner, it could be taken over by the bank, then you may try an offer for $110,000.

George

import · January 29, 2001, 7:31pm

I Don’t See A Deal Here - Posted by phil fernandez

Posted by phil fernandez on January 29, 2001 at 20:31:44:

Let’s see, 1st and 2nd mortgage total $170,000 and the property is worth $145,000. What’s the deal here. And I bet your mortgagor would like to stay.

Let’s do some math here.

The 1st mortgage balance is at $118,800. If the property is worth $145,000, I can’t see the 1st mortgagee discounting.

Now the 2nd mortgagee has a balance of $52,000. Now that is where you will have to get your discount. And what I’d offer the 2nd would be about $5,000.

1st = $119,000
2nd = 5,000

$124,000

FMV = $145,000

```
$124,000
```

$21,000 maybe profit. And how about the holding and advertizing costs. That will eat into your potential $21,000 profit. And I’d only do this deal in a fast paced sellers market.

import · January 30, 2001, 11:40am

How about this… - Posted by SueC

Posted by SueC on January 30, 2001 at 12:40:38:

If the second takes a discount to $5,000 and the first is willing to re-amortize, maybe the underlying 18K plus half the back due amounts an amount on new terms without having to pay $7,000 in lates and fees, there might be something here to rent out or lease/option. While there’s now equity to cover the first, the bank probably would rather avoid the months of non-payment while foreclosure proceedings and additional legal fees and costs continue to eat into whatever equity is left.

import · January 29, 2001, 9:34pm

Re: I Don’t See A Deal Here - Posted by Stacy (AZ)

Posted by Stacy (AZ) on January 29, 2001 at 22:34:10:

Many times sellers interpret the remaining principal owed on their note as the total owed to the lender. Five months of arrears is another $6500, and add to that penalties and legal fees, and the total owed to the lender may be up around $127K or more.

If the prospect of $21K “profit” is tempting you to disregard Phil’s advice, make very sure what is owed on the first before pursuing this deal.

Stacy