Posted by tim jensen on September 20, 2003 at 12:55:58:
Thank You
Subject-to and bankruptcy kinda urgent - Posted by Tim Jensen
Posted by Tim Jensen on September 18, 2003 at 20:35:45:
Hi All,
I have a unique situation. Here are the details.
Woman is in foreclosure, sale is Oct 3rd. She has filed bankruptcy and that will be dismissed on Oct 3rd. She is about 12k behind in payments and owes 49k.
What I wanted to do was bring her loan current and take the property subject-to. I am a bit concerned about the bankruptcy.
My questions:
1)Should I take the property subject-to even though she is in bankruptcy and what is my risk?
- Should I just pay all cash and be done with it.
Thanks for the help,
Tim
Re: Subject-to and bankruptcy kinda urgent - Posted by JT-IN
Posted by JT-IN on September 18, 2003 at 20:55:39:
Tim:
The concerns that you have regarding the purchase and the Bk, are not mitigated by paying all cash. Whethere you buy subject to or pay cash, the risks of a Bk Judge implementing the look-back period are the same; sale set-aside. In fact, as I think it through a bit, what if you paid CASH, and the Bk Judge did set aside the sale… and she couldn’t qualify for a new loan… that doesn’t mean she doesn’t get the property back. You could then be foreced to become a lender, in that instance… (possibly taking this to an extreme, but it could happen that way).
As long as you wait until she has received the discharge from Bk court, I see no reason why NOT to buy Subject To. The only risk here is if she has additional factors that may send her back into filing a Bk within the next year, maybe less.
The real issue is… are you paying significantly less (70% or less) than FMV…? What you may want to do is to get a fee appraisal, showing a value of at least 80% of what you are paying, including your back payments. This may or may not come in handy if the need ever arose, but I am of the mind set that I would rather have it “in hand” if the Look-back was ever under scrutiny… Also, I would advise having an Atty from a Title Company close the deal, at their office, with HUD-1 signed off, etc… I always do this, as opposed to “kitchen table closings”, which I think spell big problems if there is ever a need by any authority to look the deal over in the future; (either Bk court, or other agency or Atty for Seller). I simply think you will have covered many more bases by doing so, than a notorize signature, who knows where…
Just the way that I view things…
JT-IN