!!Discounting reinstatement amnts @ 11th HR!! - Posted by SB Wells (NY)

Posted by SB Wells (NY) on September 19, 2004 at 23:14:48:

Hi Kwack,

Correct, I want to reinstate the loan via payment of the arrears and buy the property subject to the underlying mortgage.

However, I provided the total purchase price so that other investors could comment whether they thought the deal was TOO THIN and would recommend passing on it! Further, If they think the deal is too thin, I was hoping that other investors could comment that they were effective in developing some forced appreciation by negotiating the reinstatement amount downward!

Please remember that I’m concerned that negotiating with the bank for a lower reinstatement amount will preclude my ability to do ANY subject to deal.

Any insights?

Thanks for the interest in my post.

SB Wells (NY)

!!Discounting reinstatement amnts @ 11th HR!! - Posted by SB Wells (NY)

Posted by SB Wells (NY) on September 19, 2004 at 22:12:32:

I’m a newbie investor working on a deal. The homeowner is facing an auction in a FEW days! Based upon the payoff and/or reinstatement figures that I received the deal is a SHADE THINNER then my profit target . My plan was to bring the loan current and purchase the property subject to the existing financing.

For point of reference:

The underlying mortgage is $240k
The amount of arrears required to reinstate the loan is $40k ( Interest included in this amount is approximately $25K).
Consequently, the total amount due the bank is $280K.

The homeowner will accept $3k for the keys. Therefore, the total purchase price before acquisition costs (i.e. transfer taxes, attorney’s fees etc) is $283K.

The FMV of the property is approximately $350k - $360K

Questions:
1)Has anyone had any success discounting either the payoff or reinstatement figures just before the auction occurred?
(BTW, The foreclosure process has been going on for approximately 18 months.)

2)Is it at all possible to be straight forward with the bank and tell them that I want to buy the property subject to the existing financing but I need a discount to make the deal viable? If I make this request and it is denied have I jeopardized my opportunity to work a “thinner” subject to deal? (Please note that the subject to deal is especially appealing since I don’t want to be personally liable for the mortgage or any financing related to this deal.)

  1. Assuming the discount is not available, Would you do this deal or is it TOO THIN?!!

All insights and experiences will be greatly appreciated.

SB Wells (NY)

Re: !!Discounting reinstatement amnts @ 11th HR!! - Posted by kwack41

Posted by kwack41 on September 19, 2004 at 23:01:52:

You are bringing the loan current not paying off the loan right? Why are you saying that you need to come up with $283K?

You need to bring the loan current before the sale, $40K, and then you can assume the payments sub-2. There might be a chance to make a forebearance agreement with the bank to defer some of the payments over a determined amount of time. They might not be very motivated after this amount of time and so close to the sale though.