Posted by B.L.Renfrow on July 28, 2003 at 21:41:56:
I believe the BK would still show up on the seller’s credit report, even if it is dismissed. In addition, most every credit application I’ve ever seen ask, “Have you ever filed bankruptcy,” to which the seller would be obligated to respond in the affirmative, even if it ultimately was withdrawn or dismissed.
Sure, filing BK would delay the foreclosure sale, but I don’t think you could present it to the sellers as a way to avoid having a BK on their credit report.
There is a deal that I am not sure if it is worth pursuing. Here are the facts:
Homeowners are in foreclosure. The sheriff’s sale is approaching fast - end of this week.
Homeowners are willing to deed us their house.
They owe about 80K. House, based on comps, is worth 90-100K. It is a 2 bedroom, with basement, 2.5 garage, fireplace, dining room, sitting room, back porch, etc.
Their monthly payments are about $637.14. May be able to rent in this area anywhere from 700s to mid 800s for a 2 bedroom house.
After talking with loss mitigation, short sale does not seem to be an option because the lowest they said they can accept is 75K to postpone the foreclosure.
It will cost about 13-15K to reinstate their loan. This is the only other way besides full or close to full payoff they will accept to cancel foreclosure.
Homeowners said their main need is to not have a foreclosure on their name, although they asked if they were going to be able to get some cash.
Is this a deal worth pursuing or not? Is there enough a return on our money for us to reinstate the loan and take over the payments?
If the first will accept $75k pay off and it appraises for 100k that?s a good candidate for a retail flip and carry a second. Not a whole lot of cash up front but I?d make an offer. Email me if you need help.
Ok, here’s what you can do, but you will need the services of a real estate attorney. Have the owners file for bk. This will stop the mortgage dead in its tracks (at least it does in CA.) Reinstate the loan for their amount owed in arrears (based on the numbers you put up there, they shouldn’t owe $13k to reinsate the loan, that is probably the number given since the auction is so near, however, if the amount is still $10k or more, don’t waste your time.) Once loan is reinstated and before bk discharges, revoke the bk so the owners don’t have a bk on their credit. However, before you suggest this to the owners, make sure you have a firm contract to purchase the prop from them. Also, there is not enough of a price margin for them to get any cash out of this. They should be happy just to save their credit.
Good luck and good investing,
Rocky
And they wanted some cash on top? Yeah right! At this stage, saving their credit should be their main priority.
Personally, i wouldn’t waste my time on this one, can’t see any money to be made on it. Personally, i would wait for it to foreclose, then become a REO, and then keep offering a lower figure, say, $60k, every 2-4 weeks until it is sold to someone else or you.