Pre-foreclosures:How Well Will This Work? - Posted by wanttopartner

import · May 22, 2006, 1:57am

Posted by wanttopartner on May 22, 2006 at 12:20:14:

Well, this has been an interesting last couple of weeks since we started talking with that friend of ours who is also a mortgage broker and started f***** around with preforeclosures just to see ‘how far we could get’ that earlier post of mine with the multifamily property where he wants to ‘walk away’ and it’s valued at $750K, it’s ‘real’ and ripe for the right investor with that kind of financial ability to takeover his existing loan. There is a property more towards Fresno, CA that we traced and sent a letter to showing a copy of the posting of their notice of default in the amount of $19,000, supposedly there is a second mortgage on the property, but who knows what other liens, taxes etc. are on the property? When I called the bank in second position, they refused to read off the info, hence, the letter to the owners. It is in an area where the zillow.com estimate of value is in the neighborhood of the mid $600,000. I sent a letter to them which they emotionally(seriously, the woman sounded like a ‘basket case’ when she called us at 11:16 at night) called us back on and they are interested in talking to us about taking us up on our offer because they are at their wit’s end having both lost their high paying jobs(and as anybody knows, an honest job that pays at or better than the cost of living is difficult to find these days unless you have a 4 or an 8 year degree and a specialty of some sort that affords versatility, you will be ‘stuck’ taking a below cost of living job while you look for the real thing for at least 1 to 3 years in today’s job market), here is how I worded the letter:Dear Mr. and Mrs. ***** We saw your home listed at *****.com as follows below this letter and would like to know the balance and monthly payments remaining on the home.

If the amounts are no more than $50,000 I would be able to secure a new loan to purchase. If this sounds like something you might consider before your home goes to foreclosure, please contact me or *****
------------BELOW IS THE SUBJECT PROPERTY WITH IDENTIFYING INFO ANONYMIZED WE FOUND THE OWNERS NAMES THROUGH PUBLIC RECORDS------------------
$2610 - â?º Pre-FORECLOSURE Property: 000 ***** Ave (4BD/3BA)â?? (****,***county)

Reply to: see below
No contact info listed below? Let them know.
Date: 2006-05-16, 3:48PM PDT

000 , NAME OF CITY
Single-Family Residence /Townhouse
4BD/3BA, 1,513 square feet, 0.11 acre lot size (4,791 SF)
Approximate Default (“Delinquent”) Amount: $2,610
Loan Amount: $19,100
Zillow.com estimate of value: $657,882
Trustee: (NAME OF LENDER)Financial Corp
Trustee Phone Number: Please refer to free online report
Trustee Sale Number (TS#):
Lender: **** Financial
Lender Phone Number: Please refer to free online report
Loan Doc#: 000*
INSTRUCTIONS for Interested Parties:
Call the trustee and lender, referencing the trustee sale and loan numbers.
To learn how to obtain the phone numbers, please access the free online report.
Additional information about the property may be found at the office of
the Santa Clara County Recorder.
Free Online Report: Bank Foreclosure (REO) Direct Purchase Program
Broker

import · May 22, 2006, 1:57am

Pre-foreclosures:How Well Will This Work? - Posted by wanttopartner

Posted by wanttopartner on May 22, 2006 at 01:57:27:

There are lots of NOD’s in our area which is high priced(an average 3br/2bth home starts in the neighborhood of $300,000). We currently rent at around $1000 per month. One of us has a pension of $880 per month which is adjusted to the cost of living every year, so that is a ‘permanent’ income that will not go away. We’d like to know how much success anyone has had doing the sort of scenario I describe here and if so, what percentage of people in default of their loan might consider this ‘way out’ in the course of a year of approaching homeowners in default:

Here’s the deal, since my job I do not anticipate staying in much longer because I am career displaced, what we have done is have the one of us with the pension(stable, permanent income) get prequalified. Turns out credit issues will only allow us to qualify for up to $50,000. What we would like to do is partner with an investor looking to realize 50% to 100% most likely a bit more than 100% return on investment should they decide to ‘go in’ to a property found through the Notices of Default. We figure if someone in Preforeclosure is desperate to be rid of their problem while preserving their credit through satisfaction of the remaining loan amount that a reasonable offer would be on paper to pay off an existing loan amount of no more than $50,000 with the remainder amount put up or qualify for a new loan by the investor to bring the offer up to no more than 1/2 of the market value. IE: a subject property valued at $400,000 where the offer is equal to $200,000 with $50,000 paying off the defaulted loan and $150,000 that the seller could walk away with in a desperate situation while we and the investor, realize a $200,000 free and clear built in equity position that subject to variables of condition could represent a greater return on investment if due to the property condition we offer less than 1/2 of market value.

import · May 22, 2006, 12:18pm

Re: Pre-foreclosures:How Well Will This Work? - Posted by BTI

Posted by BTI on May 22, 2006 at 12:18:34:

You say there are lots of NODs so I assume your in a trust deed state. Always give the state and the posters can give more specific advice.

Your brain is working fine, what you propose can be done but as the other posters have indicated your chances of finding it are in line with winning the lottery. Why? Put yourself in the sellers shoes, If I couldn’t make the payments on a $50k loan on a $400k house why would I sell it to anyone for $200k. Anyone with an IQ of more then minimum would simply list it with a Realtor at a desireable price, I could list it at $375k, and offer a 10% commission and sell it in a couple weeks and walk away with a lot more then the $150k in your example.

If you were lucky enought to find such a deal, it wouldn’t be hard to find an investor partner, but if you found such a deal you could forget the partner and use a hard money lender.

My suggestion is you spend a lot of hours in the archives on this site and start gaining a general education, start with hard money lenders.

Also when your mortgage broker starts contributing to what is a fantasy world to us, bring him back to earth by asking for complete details and proof.

BTI

import · May 22, 2006, 2:32am

Surely you jest! - Posted by stan

Posted by stan on May 22, 2006 at 02:32:08:

You are assuming that a $400k homeowner who only owes $50k will ignore the dozens of vultures knocking at his door and jump at your offer of less than half of market value?

If you ever find this owner, let me know. I’ve been looking for someone this stupid for nearly 20 years.

import · May 22, 2006, 3:46am

No Jesting Re: Surely you jest! - Posted by wanttopartner

Posted by wanttopartner on May 22, 2006 at 03:46:50:

We have a friend who is now a mortgage broker and quite a bit wealthier than he was 14 years ago who is getting us involved in searching for these types of situations. He told us that throughout the year he will run across situations where homeowners as well as multifamily property owners are ‘ready to throw in the towel’ and for whatever reason are perfectly willing to cut and run with even a smaller amount over and above an existing loan amount that is not even 10% of the property value just so they can make a clean break. It is interesting you would say that you’ve been looking for this stupid owner because I found one multifamily property owner who wants to just ‘cut and run’ allowing the right buyer/loan takeover candidate on a loan that is large on a $750K property, here is what he wrote in his ad, our mortgage broker friend is seriously considering it:

*****(name of city withheld)"Duplex, only one in miles of its location!!! We fell on some hard times and need to sell before it goes into foreclosure at the end of this month. The property is worth $750K but I do not want to deal with the long process of listing the home for sale.

All I want is my loan and prepay penalty paid off and my credit-rating protected, you can keep the equity.

Please feel free to drive by, but DO NOT approach the tenants that are there, thanks.

import · May 22, 2006, 5:46am

Re: No Jesting Re: Surely you jest! - Posted by Mike-OH

Posted by Mike-OH on May 22, 2006 at 05:46:24:

Wantto,

Stan is right. These deals only happen with frequency on TV infomercials. If someone has a house worth $400K and only has a $50K mortgage, they are going to sell the house and keep the equity, not give it to you for a little over $50K.

Also, most successful investors are not going to loan money or partner up with a newbie that has no money and only brings in $800 per month (I know I wouldn’t). However, a successful investor would buy the property from you if you found a great deal, so you might consider wholesaling. The big problem with your idea is that you aren’t going to find many deals like you described.

Good Luck,

Mike