Posted by Ken Jacoby on December 31, 2001 at 10:45:19:
Travis,
I haven’t ever written any textbooks - I wasn’t aware of an author by that name - don’t know if it may be a relative I’ve never met. I wished they would have had a creative real estate cirriculum when I went to school. Regards,
Ken Jacoby
Foreclosure advice needed - Posted by miket
Posted by miket on December 30, 2001 at 24:16:57:
Hello,
My question relates to foreclosures. If the owner of a home goes into default and has maybe 60% equity in a house can’t they just get an equity line of credit? I’m a bit confused on why if they had equity they just wouldn’t refi or get an equity line instead of dealing with an investor or going to foreclosure. My gut tells me that no lender in his right mind would extend anymore to them. However, I know how some mortgages companies have much thinner rules. Thanks for any answers.
Mike
Re: Foreclosure advice needed - Posted by JT-IN
Posted by JT-IN on January 01, 2002 at 13:44:20:
Mike:
There are numberous reasons why these situations occur, with high equity homeowners going into default. Many times these HO’s will have existing judgements or liens against them, (IRS, etc.), which will preclude a lender from offering refinancing, without the payment of these liens in full. The inclusion of the liens will possibly take the LTV ratio out of range for the lender. Also, divorce is a culprit in some cases. These HO’s are the highest risk and least likely to be funded, regardless of their equity position.
Lack of knowledge on the HO’s part is at play here, as well. Some of these folks just plain don’t think that they can be funded, in their present state. This category of HO makes the best target for a possible deal.
The best approach is to not assume anything here, and just ask questions, while offering helpful suggestions, to gain some trust from the HO. Once in a while these turn into a profitable contact.
Just the way that I view things…
JT-IN
Re: Foreclosure advice needed - Posted by Ken Jacoby
Posted by Ken Jacoby on December 30, 2001 at 24:38:51:
For whatever reason(s) it does happen. Folks with high equity do go into default. You would think they would just do as you suggest - get an equity loan - so why don’t they?? I don’t know. Once they are in default, institutional investors (banks and mortgage cos) won’t touch them - it is against their underwriting guidelines. Sometimes investors will step in – it is risky because when folks are in financial trouble, they often file bankruptcy which will stay a foreclosure proceeding (hold it up) for a few months while the bank or investor has money invested with no return. It is risky territory for a bank. I have bailed folks out of FC and I have also bought property pre-FC – in each case it was a win-win at the time. But you got to know when you do a bail out you need to be invested at a low LTV so you can wait out a bankruptcy stay for 6 months - I have ridden out a couple but alway make my money sooner or later. The people I bailed out, in the end could not manage their finances and got into trouble again.
It is a bit of mystery, but so are people. It often affords some opportunities - you must remember, you did not create the problem, but sometimes you can bring solutions.
Regards,
Ken
Re: Foreclosure advice needed - Posted by Travis (Dallas)
Posted by Travis (Dallas) on December 30, 2001 at 06:29:34:
Are you the Jacoby from Texas that writes real estate text books for colleges?
Travis