Posted by JoeB(Atlanta) on January 30, 2000 at 09:58:28:
Hi Scott, you and I have a different perspective on “subject-to” deals. I feel that if you’re going to takeover someone’s mortgage (even though it’s in there name) you MUST have every intention and means to pay that debt…even though it’s still in there name, even though you could just stop paying it.
So I negotiate my discount up-front, before I buy. So that I’m happy making all the payments, and making a nice profit.
I am getting alot of calls from people in Forclosure or in trouble but there is just no equity there. I just read a post on Joe Kaisers Board where a guy bought a property and the lenders all discounted their balances drastically. Can someone explain how to do this. I have a couple of Questions.
Do I take title first and then ask for a discount?
Do I need to pay the lender off to get a discount?
What exactly is a short pay and how does this work?
Re: How do I Negotiate short pays and discounted Mortgages - Posted by JoeB(Atlanta)
Posted by JoeB(Atlanta) on January 29, 2000 at 10:53:16:
Hi MCF, DON’T take title first and then ask for a discount…'cause if you don’t get the discount, you now have inherited the whole debt!
The common method for negotiating a ‘short pay’ (aka ‘discount on the mortgage’) is to talk to the lender(s) and explain that you are going to CASH them out, but the house is only worth $xxx due to (repairs, etc…send them photos if possible), so the most you can pay them and still make a fair profit is $xxxx. If you can prove you have cash (or access to it somehow) and that you’re buying as-is, and that you sound credible…you stand a chance.
This works for us about 25% of the time, the lender then requests all this in writing with photos, comps, etc. and takes a month or 2 or 3 to get back to us…
There is also a guy who posts on this site (i think NJDave??) that offers a service where he writes up a professional proposal of the above, and submits more officially to lenders…
Anyway, the short pay works sometimes…you have to decide if it’s worth your time & effort.
Joe,
Perhpas I missed something in MCF’s post, but surely when you said “DON’T take title first and then ask for a discount…'cause if you don’t get the discount, you now have inherited the whole debt!”, you didn’t mean it, did you? Only in the case of an assumable note would your statement hold true.
It is perfectly fine for MCF to take title which would be WITHOUT having ANY liability for the NOTE. The seller would still be on and responsible for the note, but if they signed a deed over (subject to) then of course they relinquish control (in this case ownership).