Posted by Scott Bell on June 13, 1999 at 24:08:52:
I received a call from a man whose house is in the foreclosure process. No sale date set yet. He needs about $12,000 to cure the foreclosure, and wants to use his natural gas cash flow as collateral. The monthly payments from the NG well vary from month to month but average $500 per month. I have seen the statements.
He says it would take months to get the gas company to transfer the account to my name (is this true?), time he doesn’t have due to the impending foreclosure. He wants to set up an account at a local bank with my name on it and deposit the check each month himself. I know that is not a good idea. The house was just appraised at 250k and his total mortgages 1st & 2nd add up to 184,000 plus what he needs to cure the first. The 2nd is now current.
My questions are this, is there a way to structure this that would give me a secure position w/o transfering the cash flow account from the NG well to my name? What kind of return should I be looking for? Is there a deal here at all?
How would a person buy a cash flow that varies from month to month? What would the contract spell out?
This man is very motivated to keep his house and is willing to do anything within reason. Any suggestions are greatly appreciated.
Thanks in advance,