Need advice on 2nds & foreclosure arrearages deals [long] - Posted by J.D. [Journey] Swindell

Posted by Stacy (AZ) on April 21, 1999 at 19:00:25:

Can you give more details about the underlying loans? Balance, interest rates, etc?

Stacy

Need advice on 2nds & foreclosure arrearages deals [long] - Posted by J.D. [Journey] Swindell

Posted by J.D. [Journey] Swindell on April 21, 1999 at 18:26:01:

Since I am a newbie at investing I would appreciate any suggestions on how to finance & structure 2 deals.

Deal #1] 3/1, 1,200 sq’ aprox., brick & wood, slab, aprox 30 yrs old, with an after repaired FMV of aprox 55K. This is a VA assumable pre foreclosure where the seller has 7K in arrearages. I want to assume his loan, but need to bring his arrearages of 7K current to do this. At this point I have not seen the inside, but have been told that no repairs are needed, but intend on viewing the interior in the near future to confirm this. As of now there would be only $500. needed to clean up the property. My intention is to retail the property once I have aquired it. Since it is a VA property, I can’t flip it…as I understand the VA guidlines. Although, the total $ involved apprears at this point to fall within the 60% guidlines for hard money lenders, I do not want to go this way because I want to assume the low VA %. Since I do not have the funds, can anyone suggest some lenders or where I find lenders for a second for the 7K arrearages? Or is there a better way to consturct this?

Deal #2] .3/1 1/2 / brick & wood, 1200sq’, aprox. 30yrs old, and less than 1K in repairs & clean-up which are mostly cosmetic. FMV after repairs is aprox 55K. This is a FHA pre foreclosure which is about 4K in arrears. At this point I do not have all the figures, but if the total costs falls inside the 60% for hard money lenders, I will go that route. Although, I think that the purchase price, fixup & closing will be aprox 65- 70% of the ARV[after repaired value], thus requiring a new loan or some other type of financing. The owner is against L/O, he has been burned 2x doing this method. Can anyone suggest some financing options and lenders? Thanks in advance any assitance.

Re: Need advice on 2nds & foreclosure arrearages deals [long] - Posted by Jackie in Dallas

Posted by Jackie in Dallas on April 22, 1999 at 09:45:35:

Journey, it appears from your posts that you are thinking long term holding on both these properties but are not set up financially to achieve that goal.
Sometimes you just can’t have your cake and eat it too!

SO…Why not structure them for QUICK CASH - get in and out of the deal as fast as possible.

Deal #1 - you have 2 choices call the VA and ask if they will do a forebearance agreement - another words roll all the arrears payments to the back of the loan. They will probably require that you pay SOME of the arrears but not all of it. Their office is in Waco, call Richard Clark 800-827-1000 x9659.

The best thing for you to do if that won’t work (always have a back up plan) is to go ahead with the hard money loan and cash out the VA loan (forget about the low interest rate). Just fix up the house and resell to a retail buyer that gets a new loan. You get your cash and move on to the next one.

When we read about all these “CREATIVE” techniques it’s tempting to try to incorporate them into every deal we do - but sometimes the easiest and fastest approach is the best way to go.

It sure bests the heck out of the alternative - lose the deal AND any profit!

Re: Need advice on 2nds & foreclosure arrearages deals [long] - Posted by JPiper

Posted by JPiper on April 22, 1999 at 01:06:20:

If my goal were to buy and then resell quickly, my preference would be to acquire the properties subject to the existing loans…in other words, just take the loans over.

To bring the loans current if I didn’t have the cash, I would contact some of my friends/associates/acquaintances, etc., and make them a deal. Most of them probably have $4K, that they would be happy to make a high rate of interest on for a brief period of time. $7K wouldn’t be difficult either.

Other possibilities would be a cash advance on your credit card.

JPiper

Re: Need advice on 2nds & foreclosure arrearages deals [long] - Posted by Stacy (AZ)

Posted by Stacy (AZ) on April 21, 1999 at 18:30:24:

Can you expand on the seller’s problems with L/Os? What went wrong?

Stacy

Re: Need advice on 2nds & foreclosure arrearages deals [long] - Posted by Phil_MA

Posted by Phil_MA on April 22, 1999 at 15:51:40:

Yes, I agree. Contacting the VA would be the WRONG thing to do.

The loan servicer is the place to start

Re: My understanding is different that your’s - Posted by David M. Petrovich

Posted by David M. Petrovich on April 22, 1999 at 11:15:23:

I believe that the type of remedy that your first scenario describes
is NOT a forebearance, but a loan modification. My advice would be to contact the mortgage loan servicer, NOT the VA. If the loan is in the early stages of delinquency it’s the Servicer’s responsibility, not the VA to implement non foreclosure alternatives.

A forebearance plan typically requires that the arrearages be repaid over a specific (short term)
time period of between 3 and 12 months.

Most lenders’ forebearance plans include the Borrower to make regularly scheduled monthly PITI payment, plus a percentage of the arrears (usually an additional 1/2 payment. 3/4 payment, double payment, etc.) which will be determined by the Servicer, and the ability of the Borrower, until the delinquency is cured.

Hope this helps.

Re: Need advice on 2nds & foreclosure arrearages deals [long] - Posted by J.D. [Journey] Swindell

Posted by J.D. [Journey] Swindell on April 21, 1999 at 18:45:50:

2nd Deal] The previous tenants, destroyed the property, which the current owner rehabed and again L/O. The second time the propety was L/O there was some destruction of the property, but the main problem was that the 2nd tenants did not go thru with the L/O. After these last tenants moved out the owners fell into financial problems and couldn’t sell the property and let the property go till this point when I found it. The owners are quite notivated but the arrearages have to be brought current to keep the property from foreclosure. Even if I could bring the property current, which I don’t have the funds for, the owners do not want to be in this position again and will not consider L/O. I think what I need is sources for seconds…that is unless someone can suggest another way to structure the financing. Thanks

Re: Need advice on 2nds & foreclosure arrearages deals [long] - Posted by Jackie in Dallas

Posted by Jackie in Dallas on April 22, 1999 at 17:33:26:

Actualy, I’ve had several success by taking the approach of contacting the VA. They in turn contact the servicing lender and instruct them about what measures to take.

When I’ve tried to just contact the servicing lender - they always say it’s a VA loan and it’s up to the VA.