1st Mortgage assumtion at a discount -foreclosure. - Posted by Richard Rynkowski

Posted by Richard Rynkowski on July 28, 2001 at 24:28:33:

Very insiteful…but attitude wasn’t what I was looking for. More specifically I wanted to know about how low can you go before they say NO. If I offer what I feel is fair to me, $1.00 down and $1.00 a month I don’t think it will fly. More insitfull would be an answere about what the trend is for lenders accepting low offers and at what discount etc. I think that If I wanted to sell a land contract I could expect a 50-65% discount. What kind of percentages can one expect to offer lenders on foreclosures and seconds and have them go for it. Isn’t there some guidelines out there? Yes, I understand you need to know the balances of the existings. This case is 56,800 balance on the first with 26,900+ in rearages and fees and escrows to bring it current. The second is 18,900 with total arearage of 3,383.
I’m thinking of offering a simple assumtion on the 1st of 58,816 Plus cash of 1,122.58 bringing the escrows current. The second, 18,900 I was flat turned down on 12,000 on my first offer. But here, time is money for them and as you say they will end up with nothing so I thing since time is awasting for them I’m going to make a second offer in writting at 10,000 or less. Do you think 10K is to high? Maybe I to shy, but your suggestion of 4K seems awfully low. Do you really believe its a reasonable offer? Well, I guess the worst is they would say No… How about the first??

1st Mortgage assumtion at a discount -foreclosure. - Posted by Richard Rynkowski

Posted by Richard Rynkowski on July 22, 2001 at 13:19:59:

Home owner is eminently going into forclosure.

1st Mortgage: FHA 9.5% $58,800 Balance. (simple assumption)
Escrow balance: ($1,122.00)
Interest Arears: $17,810.00
Current PITI $664.60
Late Fee: $104.00

2nd Mortgage: $18,900 balance @ 14.5%
Payments Past Due including fees: $1,900.00

Property Conditions:
CMA after repairs: $114,000.00 (114-119k)
Estimate of repairs: $7,000.
Monthly rental rate $750.00

Owner willing to get out at existing costs if purchaser will pay all closing costs etc. Purchaser will walk away with $0.00 dollars. What ever purchaser can arrange with lenders is OK.

2nd Mortgage (Mortgage Company) willing to accept
$12,000.00 Payoff.

In your opinion:
What can be negociated with the 1st Mortgage lender (Mortgage Company, not bank)?

  1. Can the 1st be assumed at less than balance + Interests + escrows?
  2. Buyer can’t pay any cash on 1st. (due to 2nd payoff+ closing costs($3,000)+ repairs + holding costs @ 4 months)
  3. Buyer can’t qualify for new first.
  4. Rents would be $750/mo +all Utilities figuring 1 month vacancy + $50.00/month repair budget the ROI goes negative.
  5. I believe the option is to purchase and sell?? Preferably on a Land Contract @ 10-11% with a 5yr ballon??

What is your opinion??
PS this is the first time I’ve gotten into such a tangled web and trying to make it profitable.

Re: 1st Mortgage assumtion at a discount - Posted by Richard Rynkowski

Posted by Richard Rynkowski on July 22, 2001 at 13:28:09:

Last question correction: Purchaser to pay all closing costs. SELLER TO WALK AWAY WITH $0.00. Any arrangements the purchaser can make with lenders is OK.

Re: 1st Mortgage assumtion at a discount - Posted by Nick

Posted by Nick on July 23, 2001 at 11:01:27:

As a normal rule I don’t do deals when the question is “Will I make money on this?” I will only do the deal when the question is “How much will I make on this deal?”

As for the 1st Mortgage I would offer the on the 1st what I thought was fair for me not them. And on the second I would only offer 20% of what is owed or about $4,000. If this thing goes to foreclosure the 2nd Mortgage holder will get nothing. 4 is better than nothing. As for the 1st if it goes to foreclosure they have to pay the lawyer about 4% of the sell price. Take all that into consideration before you negotiate with the note holders. Remember you are doing these people a favor not the other way around.

Good Luck