Re: help! Foreclosure deal (my 1st one!!) - Posted by JohnBoy
Posted by JohnBoy on March 16, 2002 at 11:22:06:
When you verify the amount to catch up the arrears with the lender, before just agreeing to catch up all the payments, first ask them if the owner could pay all the principal and attorney fees that are due, if they would be willing to waive all the back interest that accrued? Sometimes they will, sometimes they won’t. But you never know unless you ask first.
The 7 months of arrears will mostly be interest accrued since most of the payments go towards interest first with a smaller amount going towards principal. So if the total amount in arrears including attorney were $10k to bring the loan current, $3k of that may be principal and attorney fees where $7k of it may be accrued interest. If they agree to waive the interest if the owner could pay the $3k in principal and attorney fees then all you would need is to send them the $3k instead and save yourself another $7k on the deal. All they can do is say no!
Then if they won’t go for that then see if they would take a partial payment amount and roll the rest onto the back end of the loan. Or at the very least if they would take a separate payment plan on the rest to allow the owner to catch up.
If they accept either of these terms then that’s just that much more cash you will save from having to come up with now to bring the loan current.
Then you can buy the property from the seller, subject to the existing loan, give her the $2k she needs and send the lender want they need, and just take over the payments.
As far as would it be easier to just get a new loan rather than taking over the existing loan, heck no! It might be easy for you to be able to just get a new loan, but WHY go out and put a new loan in your name if you don’t have to??? Why use your credit if you don’t have to? Why take on more personal liability for a loan if you don’t have to?
Later on IF the lender ever found out about it AND IF they pursued the issue by calling the loan due AND IF they actually followed through with it, they would still have to go through the foreclosure process to get the property back if you told them to go pound sand because you refuse to pay them off!
THEN if you had to when push came to shove, THEN refinance the property to pay them off if you had to. If you have the ability to get a new loan to purchase the property then getting refinanced after you OWN the property will be even easier and quicker than trying to get a new loan now to purchase it! But chances are that even IF the lender ever found out they would end up doing nothing about it as long as the payments are being made on time.
So WHY take on all the added liability with being personally liable on a new loan in your name and use your credit when you don’t have to???
Now don’t let onto the lender what you are thinking about doing here. Do just like JT said. Fax them the authorization form to release information about the loan and just act as if you are a friend of the family trying to help the seller out by bringing the loan current so they don’t lose the property. Then once you get the actual figures it will take to bring the loan current and you have verified there are no other liens against the property, have the seller deed the property into a land trust, naming the seller as the beneficiary of the trust, then have the seller assign their beneficial interest over to you using a separate assignment of beneficial interest form naming you as the new beneficiary of the trust, have it notarized, and that’s it! You now own the property! Send whatever amount the lender needs to bring the loan current and just start making the regularly scheduled payments on time!
But be sure to ask the lender about waiving any accrued interest if you could pay all the principal in arrears and attorney fees first. If they say no, then see if they would at least be willing to take a partial payment and roll the rest onto the back of the loan or if they would take some of it by setting up a separate repayment plan to catch up the arrears. Ask in that order. All they can do is say no and require the full amount to be paid up front in order to reinstate the loan! If they say yes then it saves you that much more from having to pay out of pocket to bring the loan current.
When you talk the the lender acting as a friend of the family trying to help the seller from losing their home AND having to possibly end up filing a BK as a last resort to save the home, the lender may be more willing to take less and work something out on most of the arrears. When they hear owners may file a BK they know that can delay the foreclosure process, costing them more money and take them longer to get the property back, they may rather avoid all that if at all possible and agree to more favorable terms. Worse case is you will have to pay all the arrears to reinstate the loan.