Posted by Kevin - WA on May 20, 2006 at 13:43:08:
The win-win here is that you walk away, and the seller walks away and hopes that they don’t come after him for the shortfall. Not every foreclosure is a “deal.”
K
Upside down in LA - Posted by Carolyn J.
Posted by Carolyn J. on May 20, 2006 at 13:19:50:
My partner and I are “newbies” and have a potential seller in pre-foreclosure who has taken loans out on the property and now has NO equity. He is willing to walk away with a little cash to move and start over. Property is valued about 600K and payoff on 1st mortgage is 517,000 and 2nd mortgage payoff is 132,000. Asked lender about short sale options and they did not respond positively.
Need ideas to structure a win-win-win for all. Any ideas?
Re: Upside down in LA - Posted by John Corey
Posted by John Corey on May 21, 2006 at 08:09:11:
Carolyn,
It is nice that the borrower would like some cash to walk (can we say ‘charity’?). Like they have skin in the game that they need to have cashed out. The person has nothing.
If you can agree a short sale (it would have to be a large one on the second and maybe 10% or better on the first) the borrower’s reward is you saved their bacon. They will have less damage done to their credit report than if they lose the house to the bank.
You are not a charity. You are operating a business. The lenders and the borrower made a series of bad decisions. Do not make a contribution by handing the seller some cash if you make something work. Tell them they have learned a lesson and the choice is to have a foreclosure for 7 years or to walk with less damage on their credit report.
BTW - Kevin might be right. Unless the lenders are both willing to play ball there is nothing here. If they did play ball then maybe you start to have something that is worth your time.
John Corey