Can't get a 60% LTV refi... - Posted by Bob Ridge

Posted by James Strange on August 18, 2003 at 21:57:59:

The biggest problem here is the very small loan size.

This loan needs to go to a local bank. Have you tried any?

Can’t get a 60% LTV refi… - Posted by Bob Ridge

Posted by Bob Ridge on August 18, 2003 at 16:18:02:

I loaned an investor in Dayton 23K to buy a rehab property out of a bank’s REO department. We planned on a quick turnover of the property, so we set up a simple promissory note calling for a total balloon payment of 28K in one month, or 31K in two months.

Now that we’re past the two-month period with the property unsold, we’re trying to come up with options. No one seems to want to give her a refi loan, though her FICO score is decent with no foreclosures, bankruptcies, late payments, etc. She is willing to rent or lease option the property from me, but I’d like to get out of the situation quickly.

I was thinking of redoing the note in a form that would be attractive to a note buyer. Any suggestions on how to structure a note (years, interest, etc.) so that a buyer would be willing to pay me the full 31K for it? It would be secured by the property, which has appraised three times in the past few months in the 50K’s. Thanks in advance for suggestions…


Re: Can’t get a 60% LTV refi… - Posted by Shaun (NJ)

Posted by Shaun (NJ) on August 21, 2003 at 18:42:08:

You may want to try a home equity loan. Very inexpensive to get great adjustable rate. PNC Bank will do a stated on an owner occupied up to 100% and I think it is between prime and p+1% depending on FICO. Other banks in your area may do similar.

Re: Can’t get a 60% LTV refi… - Posted by Ed Garcia

Posted by Ed Garcia on August 19, 2003 at 10:32:29:

Bob Ridge,

James Strange not only hit the nail on the head once, but twice.

He told you why you?re having the problem you?re having, and told you how to remedy it.

However there is another option and that is you can hypothecate your loan on the property and borrow against it, or just use the property in a cross collateralization deal.

Obviously the lady is not trying to rip you off, she just can?t perform at this time.

If push comes to shove, you can go to HFC, American General, City Finance just to name a few. These are finance companies that have lousy rates but with her small balance it should be manageable. She can then refinance it at a later date.

Ed Garcia

Re: Can’t get a 60% LTV refi… - Posted by jasonrei

Posted by jasonrei on August 18, 2003 at 22:24:01:

Run an ad in the area offering the property for sale, something that will grab investors’ attention. Send the leads to her and tell her you are serious about foreclosing.

If you two just want out, $50k sales price, $5k down to a decent buyer (decent will be what your eventual note buyer will consider decent). $45,000 first lien at 9% amortized over 15 yrs with a 6 yr balloon. A note investor out there might pay $38,000 for it. You get your $31k, your associate gets whatever’s left over. You have a lot of options. It’s too bad the lady broke her word, but you shouldn’t be the one to suffer the consequences.