Posted by SAutumn on June 30, 2001 at 11:43:21:
Thanks so much,
you are correct Seattle/Arizona. The borrower is going to get a payment plan approval…or not in the next two weeks. She is paying to cure - not me. The distance thing? I am in the process of contacting Tuscon investors when I realized some risks are great and some are stupid. Thanks for your thoughts.
Sheila
Please, your opinion(s) on this Foreclosure… - Posted by SAutumn
Posted by SAutumn on June 29, 2001 at 16:06:22:
Here are the facts:
I live in Seattle. Gave some one my card. They have a property they wanted to “sell” me in the southwest. After we sat down this is what I found;
Loan amount 80,800 10.50% 15 year balloon
Appraised May,2000 103,000
Behind 8 months total $5792.40
Trustee Sale July 18, 2001
Renters signed lease April 15, 2001 - April 30, 2002
Renters pay $875/month & all utilities (low average for area)
Tax $90/month
Insurance $443/year
Original Note calls for prepay penalty up to first 36 months of 6 month interest which totals ~4,000
So far I’ve contacted the trustee and obtained total amount due (back pay + legal + late charge) = 7466.16
I’ve contacted the loan servicer and sent in note of hardship, financial analysis forms from borrower and associated paperwork. She never did her 2000 taxes so I’ve got her doing that asap to send in. The servicer will review and make a decision two weeks from now which brings things mighty close to the sale. They’ll ask for 50% now and a pay plan for the rest. I contacted the renters (college kids)parents to inform them of the situation and gave them the opportunity to buy the home (no). Contacted the Insurance company and had the borrower send in over due payment to keep the coverage current. (it had stopped)
Focus #1 - keeping a foreclosure from happening
The borrower wants OUT from the responsibility of long distance home ownership.
The renters may opt to find another place to live given the trustee note on their door.
I’m seeing a lease option developing. The prepay will no longer be in effect May 2003. The price could be reasonably set at 108,800.
What is THE most effective way to get a L/O tenant in from long distance? Go ahead slam me:)
The trustee has not set a bid amount yet.
My Focus? To do a good job with the deal, stop a foreclosure, make ~$10,000 when finished (when L/O tenants buy).
Thanks,
SAutumn
Re: opinion(s) on this Foreclosure… - Posted by B.L.Renfrow
Posted by B.L.Renfrow on June 29, 2001 at 20:23:11:
I don’t see much of a deal here.
First, do you have, or can you get in short order, the $7466 needed to stop the foreclosure sale?
Second, do you have occasion to be in the Southwest, in the city where this home is located, frequently? As in, monthly?
If the answer to either of these questions is no, you don’t have a reasonable chance of doing anything with this.
You have a property encumbered up to about 86% of its value…and that’s assuming that appraised amount actually IS FMV. That doesn’t leave enough room for a retail flip.
And don’t EVER consider doing something like this with a lease option! Go back a few weeks and find a post from a now-wiser investor who didn’t follow the advice here on this topic. If you’re talking about putting nearly $8k into a deal, with sellers who are in financial trouble, the only logical way to do it is to GET THE DEED…subject-to the existing mortgage.
Now, if you DO have the money to bring the loan current PLUS cover holding costs, and if you ARE in the area frequently, it MIGHT be an OK deal. You could sell on a land contract and reasonably expect to get 10% down from a buyer, plus monthly cash flow, plus a back-end profit. If the property now is truly worth $103k, you might sell on a land contract for something like $110k.
It would not be a reasonable idea to try to do a deal like this from several states away. If that’s the case, your best bet is to offer to give/assign it to an investor located where the property is located.
Brian (NY)
Opinions…Here’s Mine - Posted by JT - IN
Posted by JT - IN on June 29, 2001 at 18:35:44:
SAutumn:
The last time that I looked, Seattle was in the Northwest, not the Southwest. So, it sounds like you are considering a deal that is long distance from you, or do you mean Southwest part of Seattle? The answer to that issue will make a big difference to my advice on how to proceed.
Assuming that his property is long distance, then it is a, well should I say, nothing left to talk about.
Assuming this property is near where you live, meaning a commutable distance, then this is what I think. It is pretty thin, but possibly workable. However, I wouldn’t do a L/O and cure a FC to the tune of $ 8000, and not have the deed; (subject-to). I would take the deed subject to, and factor in that you may have to pay the pre-paymnt penalty, so calc that in your numbers. Now if you are able to take subject-to, and not pay off the mtg, then wait until 2003 to do so, maybe you get by without paying thepenalty, but don’t necessarily count on that.
It seems that you are doing quite a good job of loan counseling here. Helping get taxes filed, etc, which is a lot to do to get a property that is so thin; but workable. I would proceed, and take no grief from anyone here, cause there just isn’t enough $$$ to be made to buy a lot of Pepcid AC, for ANY heartburn, at all.
With a little more info concerning the details, could possibly offer more pointed suggestions. Good Luck.
JT - IN