not legally…and its called…class D felony, loan fraud.
BUT, buy the property for 350K, do a next-day cash out refi. get your cash that way. youll run into LTV issues, but shop around. you wont get the entire 150K, but youll get enough to do the repairs and wait on the rest when it sells.
but just for the record, all ive been able to find so far is 70% next day refi’s. thats 350K exactly. offer 325K so you can get the other 25K minus all the closing costs your about to incur with both mortgages unless you can find a higher LTV somewhere.
Can I pocket $150K at closing? Help Quick! - Posted by Denis
Posted by Denis on September 30, 2006 at 16:18:36:
Hello All,
I’ve been a lurker and reader of the forum/articles at this site and it has given me the confidence to do my first deal.
Here is the situation: a single woman about to go into foreclosure has accepted my offer - but can I get away with walking out of closing with $150,000 in my pocket? I think its’ too good to be true!
Current Mortgage Balance with penalties, and back payments = $300,000.
Seller accepted offer of $50,000 above mortgage if I can close VERY fast (to avoid auction which is set next month).
Total Purchase Price = $350,000.
I have pre-approved mortgage of $500,000 for the property.
$500,000 Mortgage minus $350,000 = $150,000 FOR ME?
This can’t be right. Could I walk away at closing with the house AND $150,000?
How can I “justify” this amount to the lender? (Note: the lender can close according to them in 2 weeks or less if house appraises right).
Re: Can I pocket $150K at closing? Help Quick! - Posted by Chris in FL
Posted by Chris in FL on October 15, 2006 at 19:45:09:
I will be the voice that differs from the others. Most lenders will loan against the lesser of appraised value and sell price, but not neccessarily all. Be straight forward with your lender, explain the situation to them, and ask can you get cash out at closing or not. Some lenders that are keeping in their own portfolio might do it. It will either be a no, or an “yes, if the appraisal is high enough”.
However, what is the property? You said a house. If it is an investment, not many houses in that price range make sense as keepers (don’t usually cashflow). Perhaps you just finance it at your cost, and immediately move to sell it, and then cash out your profit when you sell (the boring, normal way flippers make money). Best wishes!
Re: Can I pocket $150K at closing? Help Quick! - Posted by John Corey
Posted by John Corey on October 01, 2006 at 08:41:14:
Focus on mcole’s reply as that is the answer if you are borrowing from a conventional lender.
If you have it under contract and then get it resold to someone else you can walk away with a similar sum. You would be buying low and selling high.
If you have cash or can arrange to get it then GSH’s idea for trying to buy the note is a possibility. The frequency of success there varies as some lenders just do not sell. Others do not mind the foreclosure process if they know the asset will sell for so much more they will be made whole.
If it comes back at 500K, then her offer of $50,000 above mortgage should be avoided, tell her you will pay $300K or the remaining balance, and then you would get back $200K, providing she will do this. You may have to give her a few dollars for her cooperation, But hey, your saving her butt.
Also, I would contact her mortgage company now, and make a offer to buy, say $275K after all it’s about to be auctioned off.
contact her mortgage company? well actually, those people are called lenders. and they have no authority to sell her home until after the auction, assuming they even buy it back at auction. only the owner can sell before the auction.
now with that said…good luck accomplishing that too in a month’s time. it happens all the time, but i can tell you that its gonna depend largely on the attorney handling the foreclosure. have you ever tried to request a pay-off statement from a foreclosing attorney? all i can say about this is…GOOD LUCK! if you get lucky enough to run into a very cooperative attorney youll be OK. but if you make the best offer in the world with the best intentions in the world and the attorney drags his feet, YOUR DONE!
reinstating the current loan is the easiest way to handle this. but again, the seller has to do it, not the “mortgage company”.
GSH,
Yu are passing on advice that can not be done, legally.
The lender will loan the lesser of appraised value or purchase price. The seller raising the price and giving the buyer cash at closing, if it is disclosed on the HUD-1, is fine. However, The lender will not do the loan, due to the high amount of cash back. If it is not disclosed, it is loan fraud and you get free housing for a large number of years, compliments of the state dept of corrections.