Forebearance, HUD, and .....Negotiating Pre-foreclosure...... Deal? - Posted by David Alexander

Posted by steph in tex on March 28, 2000 at 11:38:35:

My offer was at payoff. No back payments, late fees, or atty fees. Basically, I’d offer the loan balance, what was it? 84K? forget the 46K. see if that works-you never know until you ask! I had an authorization and call the lender. I referred to the seller as my “client”, told them we had a buyer at loan balance. They offered to send out overnight a shortsale packet. Lots of stuff in there. they need tax returns, paystubs, etc. on the sellers.
They wanted the contract and a listing agreement. they wanted a CMA, which was hand written-not very formal. We were on a tight time frame to get it all together in order for them to postpone the sale. Anyway, the lender then forwards everything to HUD or their HUD dept. I had my title company do alot of it. That took me somewhat out of the loop and I feel lead legitimacy to the whole thing.
Worked once- it could work for you too!
call me if you want to.
good luck!
steph in tex

Forebearance, HUD, and …Negotiating Pre-foreclosure… Deal? - Posted by David Alexander

Posted by David Alexander on March 27, 2000 at 22:56:38:

Went to a house tonight with the intent on buying it subject to. They said they owed 84k on a 110k house. House is in great condition, needs no work. They say they are in foreclosure and just want out.

Ok, so I start going over the documents and they looks to be that they went into foreclosure in March 97, were 6k in arrears, I believe. They contacted HUD a bout forebearance and then hud allowed them to start making payments of $500/month (normally 900/month) I guess this just went to the back payments, penalties, interest.

Fast forward this is 2000 and because of medical problems they were never able to catch up, so their contact at Hud said just let the house go back into foreclosure.

So now I’m out taking a look at the house thinking something can be worked out, until WHAM!.. They Need 46k to reinstate by April 1, or hud will foreclose. The balance on the loan is still 84k.

So, has anyone ever negotiated a preforeclosure with HUD? Or any other suggestions? Bought paper from them?

Sweet House, just dont know if I can get to the money in it?

If it makes to the courthouse which I’m sure no one will buy it for cash with what’s owed, it will go top dollar through Hud Auctions … 2 years from now, by the time it gets through the red tape.

David Alexander

Re: Forebearance, HUD, and …Negotiating Pre-foreclosure… Deal? - Posted by TCB

Posted by TCB on March 29, 2000 at 19:12:49:

I have dealt with the situation you describe extensively. HUD allows defaulted home owners a period of 3 years to recooperate from a distress situation. The reduction of payment amount was determined to be the home owners affordable payment at the time. The remainder of the contractual payment goes into arrears. (in this scenario, 400.00 per month for 3 years.)
Your question is what to do. The home owner does not want the house, and you do. You need an actual payoff from the lender to determine if the arrears are included in the amount seller claims to be the payoff. They may not be disclosing, and might not know, the arrears would be over and above the unpaid balance. YOu need total debt payoff in this case.

A shortfall payoff can be looked at if there is not equity in the property. To make it simple, if total debt is the 84K, and the home appraises over 100K, it is likely the bank would not accept terms of a shortfall. They can go to sale, and get total debt for the property. If the total debt exceeds (or is even close to exceeding) the value THEY have, you may still be able to pull off a shortfall payoff.
Remember, the values banks have are not always correct. Many times the Banks value comes from a BPO, not a full appraisal. Most people in foreclosure do not permit the bank inside the property to assess value, so banks have to settle for the next best thing - a drive by BPO. BPO’s vary dramatically, and are no way near as helpful to the bank as a full appraisal.
I would go for the shortfall, good luck.


Try asking for a short sale - Posted by steph in tex

Posted by steph in tex on March 28, 2000 at 08:08:41:

I just did one with a preforeclosure…
we requested a short sale packet from HUD.
they had to rush to get docs together and get everything submitted. But it sounds like your people already have a contact. get them to request the right to do a short sale, and see what happens. Have them say they have a buyer and a contract. be prepared to sent it . just put in there the language that it’s contingent on the approval of a short sale. Hud may want to see a listing agreement. (?) they did in my case. That was a bonus for me because i slotted my re agent in and we gave him a cut and reduced our pay amount even more.
my thinking is that they’ve been open to negotiations for this long- they will probably do it. it’s worth a shot. in my case I asked for 60days to close. they gave it to us- and we closed in 28 days with my new buyer.
hope this helps.
steph in tex

Re: Forebearance, HUD, and …Negotiating Pre-foreclosure… Deal? - Posted by ScottE

Posted by ScottE on March 28, 2000 at 24:55:37:


I’m sure NJDave has had experience with these and will reply.

Where did the FORTY-SIX THOUSAND DOLLAR figure come from? Good grief, what are they thinking? Not that I would threaten HUD, but if the sellers wanted to keep the house under Ch. 13 BK, they would get NO INTEREST terms up to 60 months for the arrears alone, with nothing up front!

Let us know what shakes out!

Good luck


Re: Try asking for a short sale - Posted by David Alexander

Posted by David Alexander on March 28, 2000 at 10:46:15:

If it works this will be my first short sale. What kind of offer were you making on the short sale. Did you talk to Hud are did the selllers. I was plamnning on calling hud today to find out the info for the people I’m buying from by getting them to sign a loan authorization for me so I could the research. did you tell them you were an Investor interested in buying the house?

David Alexander