PreForeclosure Opportunity or Hell? - Posted by Johnnybuymore (in VA)

Posted by Jonathan Mednick on October 03, 2003 at 22:27:25:

I do a lot of short sales. My short sales takes up to 3 months to negotiate after i have submitted or the paperwork, financials, etc. The only way you can do one on this property is if there is no equity there, otherwise, when the bank does an appraisal, and they have 50K worth of equity, they have no reason to discount.

If there is no equity, I recommend that you speak to loss migitation at the bank. They will send you the financials to have the homeowner complete, you will need to submit all the supporting docs (pictures, hardship letter, financials, 2 years tax returns, last 2 pay stubs, last 2 months bank statements). When you submit it, it will take the bank up to 2-3 weeks before they even review it. Then, they will take another 2 weeks to send the appraiser out to the property. make sure you are the point of contact for the appraiser so you can meet him/her and point out all the problems with the property.

be careful, new FHA/HUD regs won’t allow the house to have repairs exceeding 10% of the “As Is” appraised price. At least, that is the way it is in Florida.

Why tell you all this? I recently had a bank cancel the foreclosure sale and give me the time to negotiate with them. sometimes they will and sometimes they won’t but in the end, because they allowed it, i made $20K.

If the bank won’t consider cancelling it, pass on this deal.

Best,

Jonathan

PreForeclosure Opportunity or Hell? - Posted by Johnnybuymore (in VA)

Posted by Johnnybuymore (in VA) on October 03, 2003 at 21:13:42:

I received a call from an owner facing foreclosure.

The property is ARV=$180k. He is 12 months behind (owe $15,000) with a mortgage balance of about $125k, and is 29 days from auction. The mortgage is with Chase. He wants some money, he mentioned $5k, but I know that he will take less. He is willing to go to Bankruptcy… is actually in the midst of Chapter 7 but already signed a release allowing the bank to foreclose indpendent of the Bankruptcy. I spoke with the mortgage company and they told me that it is too late to
restructure the note (and besides the owner is on workers comp so he doesnt have any income to show that he could continue making payments). I figure that it will take $15k to fix the little things that are broken in the house.

The owner is happy to give it to me Subject To, but as I look at this I see my cash need like this; $2k to the owner, $15k overdue mortgage payments + $3k (est legal) to bring the mortgage current, plus $15k to repair. = $35k

So, $35k to take control of $180k with a $125 mortgage. I can then offer owner financing and hopefully get my cash back.

This doesnt seem like a good deal to me… I am thinking about passing.

Is there another way to construct this deal that I am missing?

Re: PreForeclosure Opportunity or Hell? - Posted by DG Real Estate Mentoring

Posted by DG Real Estate Mentoring on October 03, 2003 at 21:18:01:

You can call Loss Mitigation Dept. & offer a short sale of property.

DG real estate mentoring
www.classifiedclub.com/mall2/dgrealestatementoring.html

Re: PreForeclosure Opportunity or Hell? - Posted by Johnnybuymore (in VA)

Posted by Johnnybuymore (in VA) on October 03, 2003 at 21:31:41:

When I spoke with the foreclosure department they said that they needed 30 days to do a short sale on a FHA mortgage and we only have 28 days come this Monday.

Do you think that I should also discuss with Loss Mitigation?

Thanks!

Re: PreForeclosure Opportunity or Hell? - Posted by DG R.E. Mentoring

Posted by DG R.E. Mentoring on October 04, 2003 at 16:22:02:

YES, definitely.

DG R.E. Mentoring

www.classifiedclub.com/mall2/dgrealestatementoring.html