Posted by Mark_IL on May 13, 2000 at 08:35:20:
Preditory practicies, that is not a position I want to be in!! For this deal, she has not been officially notified by the lender that she is being forclosed on. She is three payments behind and if brought current soon she may never enter the process. I just need to be sure the money I give her will be applied to the loan.
Thanks,
Mark
For a PreForclosure L/P how do you make up the back payments? - Posted by Mark_IL
Posted by Mark_IL on May 12, 2000 at 23:41:22:
What is the best method for making up backpaymets if you are going to Sandwich a L/P. I will call the cash a deposit that is returnable, has anyone found a way to be sure this cash is sent to the lender to bring the loan current?
Thanks,
Mark_IL
use caution re: "pre-foreclosure laws " - Posted by leslie
Posted by leslie on May 13, 2000 at 02:35:54:
sure, its easier than you think…don’t use cash.
i use a money order. the lender didn’t care who sends or carries it to a branch office. lots of people have assistants or relatives or property managers handle payment duties. make sure it has the owners name and acct number on it somewhere.
find out the toll free ph no. of the lender’s payment processing center, there wil be a special ph no. or extension for collections and foreclosure departments.
you will need the owners written permission and ss# to access the loan info. you can ask the lender for the fax no. to fax the “permission” for you to access loan data. if you are brave you actually won’t need to fax it to them. you have written permission so just do it. you call the access no. and use the ss# to access it. keep tabs on what is due, next pmt owed and what has been received.
simply put… don’t give money to the owner, pay the bank directly.
DO NOT, DO NOT, in this situation, ask the owner to sign any deeds (ie. to hold in escrow during lease) to you or your employees if this home is in california. (and possibly other states). you must carefully follow the special foreclosure laws or you may be prosecuted for predatory pracitices. big no-no.
good luck
leslie
Re: For a PreForclosure L/P how do you make up the back payments? - Posted by IdahoRob
Posted by IdahoRob on May 13, 2000 at 01:06:18:
Mark
I have done some preforclosures and made payments–close to what you are decribing. If its my money on the line I walk with the money and the one that will make the payment to a branch of the bank and watch as the person makes the payment. The moneys really are in the form of a casher’s check made out for the correct amount – given to the person just before entering the bank.
Just remember treat this as a business deal—and cover your assets. Don’t give cash to the person and have away to record or copy what you have paid out and for what it is to be used for. I was bringing the arrears current for the owner. In your case I am not clear how you are handling the owner of the property. Are they out of the house, if so, then you should have the owners call the bank and tell them that from now on the payments will be made from a new account especially set up to make the payments and that the owner will be coming into a local branch with the full amount to bring the loan current. If the owner is going to be around in the area and he will be making the payments-- then I would have it set up where he makes it to a special account that you can check to make sure he paid on time---- Really it would be best for you if you sold the owner on you makeing the monthly payments and you send a copy of the monthly payment to him.
If by chance the owners cannot be found to do this with you ----- well don’t think you can go much more into the deal.
Another way that you might look into is the Pac-trust-- will shield you a little more from the eyes of the mortgage co. If they start looking at the new signer of the checks they could call the loan due in full on you. I have not done a Pac-trust but can see some advantages.
I hope this helps
Rob Harris
Re: For a PreForclosure L/P how do you make up the back payments? - Posted by chris
Posted by chris on May 13, 2000 at 24:55:58:
Mark-
I take it you are sandwiched between the seller in default and your tenant/buyer.
How about non-refundable option consideration from your tenant/buyer? It will be used to make up these back payments. The tenant/buyer will have this applied to the purchase price if they exercise their option. If they do not exercise, the money is non-refundable.
You can explain this to the t/b by telling them that you want them to buy, not just rent and then you are stuck remarketing the property all over again. If they are serious about ultimately purchasing this should not be a problem.
Once the seller is out of the property you can make sure that the payment is applied to the default by sending a bank check directly to the address the lender has given the seller for make up payments. To ensure the remaining monthly mortgage payments are made get the payment book from the seller. If they themselves are worried that you will not make those payments they can always check the history with the lender over the automated toll free line the bank has or on the bank website.
-Chris
Re: For a PreForclosure L/P how do you make up the back payments? - Posted by Soraya
Posted by Soraya on May 13, 2000 at 24:43:03:
1- Give the seller option consideration equal to the back payments.
2- Instead of giving the option consideration directly to the seller set up a collection service with an Escrow company. You pay the service, the service pays the lender to bring the loan current.
3- You can also have your Tenant buyer (optionee) make their monthly rent payments directly to the Escrow company. Saves you paper work. The Escrow company pays the monthly payments on the loan, and pays you your monthly cash flow profit. That way you put your transaction on management “Auto-Pilot”.
Soraya,