this is a typical foreclosure bailout and i know of people that just completely got burned by this. google “foreclosure bailout” and youll find a bunch of horror stories.
you can negotiate a short sale and buy it outright, however move your cousin into another property that’s available for lease option or owner financing. id qualify these homeowners who are in pre-foreclosure as my next tenant/buyer for another property that im able to get under contract.
What i am trying to do is have my cousin transfer her title or warrant me her deed and file bankruptcy. She is $12,000 behind in payments, she owes 134k on the loan and the home is shceduled for auction in a couple of days. With this amount of time alloted can i push all this paperwork through in time and possibly save her home?
The end result of this situation would be to lease option it back to her for an ample amount of time in order for her to get her credit back in order and buy it back.
So if she does not excersise her option i can sell it and the worse that would happen is that she would lose her home but have her debt settled.
Does that make sense? And is it a feasible approach?
Any better ideas?
Time is the enemy… people generally wait until too late, just before the auction, then want to start transferring and pull the genie out of the bottle…
The issues you face are potentially a fraudulent conveyance… anytime a debtor undertakes an action to impeded the creditors collection action, such as you describe, it is debt avoidance which the transfer would likely be reversed by a Bk court. There are look back periods by the cour especially when there is an insider involved, (friend, relative, etc), that can easily negate any transfer of such a Deed within 1yr to as much as 4 yrs, for insiders.
This can be done but you really need to know what you are doing and how to go about it, and the novice simply doesn’t know all the nuances and potential pitfalls to avoid. Once of the questions on the Bk paperwork is to list ALL properties that were transferred by deed within the past year… Any deletion of such a fact can skew the entire discharge of any debt… so extreme caution must be adhered to so as not to create a monster out of your well intended efforts.
How much is the home worth? Are you going to bring the note current? Does she have other debt that can discharged in bk? Is she self-employed? You may want to file bk. to stop the auction then either do a workout in the bk. or withdraw the bk. then transfer title. Provide more information and we can help sort this out.
Posted by michaela-CA on June 12, 2008 at 19:48:47:
mike,
I see a lot of red flags here:
you do business with relatives and it can create major problems within the family. how will the rest of the family feel, if you have to evict your cousin. Who will take who’s side. People won’t base their action on reasoning, but emotions. Who do they like better? Family split into 2 camps and you being the bad one.
If she can’t make the payments now why would she be able to make the payments to you? And will she have as much of an incentive to pay to you? Come on, you’re family - of course you’d rather want her to have food than put her out on the street, right? And if she doesn’t pay? What then? Family split into 2 camps - you’re the bad one.
Mortgages aren’t that easy to get anymore. If she files for bankruptcy, it might be years and years until mortgage companies will look at her again. Are you prepared to pay for the house indefinitely? If not - family split into 2 camps - you’re the bad one.