Posted by John Behle on January 12, 1999 at 21:40:43:
Mel and Terry needed a loan. I made a hard money 3rd of $5500 at 21% over 60 months (I advanced $5k and built my 10 pts into the loan). Win/Win? Sure, he needed the money, had a business opportunity and willingly got a quick loan in 24 hours. Not necessarily a very fun loan at that rate, but the best available.
His deal fell through. He bought and sold a business and didn’t get paid by the other guy. He fell behind in payments. I took them to breakfast at Dennys. My first question was what the problem was and next did they want to keep the house or move on.
They wanted to keep the house, and I saw the opportunity of getting rid of a killer second (and my killer third). The second was also at 21% with a 3 year amortization. The first was a nice assumable FHA loan.
I offered them the option of us taking title, putting on a new second to cover the existing second, third and the back payments. Before they left the office I had title and they had an Earnest Money agreement to buy the property back. I had title before most people would have even filed a notice of default.
If they had followed through, our capital would all be back, we would still have a monthly cash flow and they would have eliminated the back payments and lowered their monthly payment. A great deal.
In the interum, they decided to split the sheets and move on anyway. We ended up with the property, yet when I have run into Terry (haven’t seen Mel) since that time, she is very pleasant and happy to see me. Why? Win/Win. They knew that I gave them every chance possible and made every effort to help them - without having to cut my own throat financially - that isn’t what Win/Win is all about.
Just one example.