Lady on a sinking ship... - Posted by Dan (MO)

Posted by Paul_MA on December 23, 2000 at 24:27:22:

If the bank settles, for lets say 40k, the deficient 20k would be treated as income for the person named on the mortgage. Big tax bill due. For the seller, it is better to lose the property to foreclosure than to have you discount the first.

Just my 2 cents

Lady on a sinking ship… - Posted by Dan (MO)

Posted by Dan (MO) on December 22, 2000 at 23:44:03:

I got a call from one of my letters that I just started mailing to pre-foreclosures from doing research across the street at the courthouse. My girlfriend (“secretary” to anyone that asks) took the info and told me about the lady. On the way out of town to visit my folks we drove by the house. She owes about 3k back payments and the loan balance is around 60k. Have to verify this stuff but she was being honest about things because I checked my records on her that i am sure she doesnt know that I know…
Anyway, the place isnt worth much more than the loan balance but the lady wants to sell and move on. She doesnt live in the place anymore either. THis is one of those situations where you know the deal is too skinny (an understatement!) but at the same time as an investor you feel a desire to come through and help these people out.

Is there any feasible way to make this thing work? The place could sell for 67k with owner financing and low down (3-4k)charging 11% interest (interest on current loan is 7.5% based on 62,100 for 30 yrs) so maybe talking her into keeping the loan in her name and doing a subject to?

Would a PACTrust work here? I would like to think that with a PACTrust I could get the seller to pay me back the 3k back payments I made for her with a 15% interest rate for 2 or 3 yrs, in exchange for her taking 10% of any future appreciation of the house as profit, and then make the trust a long term one (5-10 yrs) for appreciation purposes (houses appreciate slowly around here) and make some on the front end with a down payment or option consideration, the back end with the appreciation, and on a monthly spread from her paying me back and the residential beneficiary making monthly payments to me via rents or sale. A subject to can be done under a PACTrust also with probably less risk all the way around.

Any creative ideas here? I hate to go over there and leave her on a sinking ship but I also know you have to take care of old number one in this business.

A short sale could also be done here I suppose. But how much a lender wuold take is the question. It would have to be real low in order for me to put in place any hard money financing that I would need to buy the place for cash. I dont think the bank will settle at 40k with a 60k outstanding balance so thats probably out.

Happy Holidays to all!

Dan (MO)

Re: Lady on a sinking ship… - Posted by dewCO

Posted by dewCO on December 24, 2000 at 14:20:22:

PACTrust is basically designed to work where there is no equity. ANd yes, try to get the seller/owner to cover some of the monthly “negative” for a couple of years. But it also depends on how much work is needed. If there’s lots then you’d have to try to get the lender to do a short sale I would think, unless you have the up front $$$ to swing it all.