Looking for help with non-conforming REO - Posted by Steve in Alaska

Posted by Steve in Alaska on December 08, 2000 at 11:03:38:

I’m surprised at the lack of response to my post. Am I in the wrong place?

Looking for help with non-conforming REO - Posted by Steve in Alaska

Posted by Steve in Alaska on December 07, 2000 at 14:53:24:

Hi all. I’ve lurked here for some time with not much to say, but I want to thank everybody who’s posted and helped with my education. This has been an invaluable resource, and I expect to profit nicely in the future from what I’ve learned here. On to my reason for posting today:

We live in Anchorage, Alaska. For the entirety of our marriage, my wife and I have been renters, and we’re mightily sick of it. After searching for a property that fit our needs, budget, and long term prospects, we finally located one about two hours south of here. 2200 sq ft, 6.5 acres, very unfinished, with an 800 sq.ft. separate shop and lots of potential. The shop is important because I’m self-employed and need it for my business (reproduction medieval armor - http://home.gci.net/~wombat -if you’re interested). The house is non-conforming for conventional financing due to the septic system needing replacement/upgrade, and the hot water pipes are inadequate and need to be replaced, but other than that it’s livable. I can do the work on the pipes with no problem immediately, and the septic system is functional at present, so I figured I’d fix it next year. Again, not a big problem as one neighbor says he’ll help, and the neighbor on the other side owns a backhoe. The best part is that the house is an REO, and the bank is highly motivated to get rid of it. They’ve not had a payment since Feb of this year, and they really want it off their books by the end of the year. The real estate agent gave me the number of the banker in charge of it, and left me to talk directly with him.

We went down last Friday to inspect the property and liked it, so I called the banker and let him know we wanted it. Even though it’s non-conforming, they were willing to carry the mortgage for me to get rid of it. Without any prompting, the banker offered to roll my closing costs into the loan, and to give me $5,000 cash upfront out of the mortgage with which to effect some of the work necessary. I put in a full-price offer, so in effect we would be getting the house for $64,900, but paying off the full price of $69,900 because of the cash. I thought it was pretty neat to walk away with cash and no closing costs from my first deal, and especially considering I was dealing with a bank. It was nice to find out that what I’d read was really true, and that banks really were very flexible with regard to property that they owned. Anyway. He took an application from me over the phone. I explained up-front that my credit was not good, but he said that really wasn’t that important in this case. All he wanted from me was a letter from my landlord stating that I was a good tenant who paid on time, and my last two years tax returns. He ran my credit while I was on the phone, asked me to clarify a couple of issues on it, and said that everthing looked great. I was surprised at that, as I know my credit is not “great”, but I didn’t argue with him about it. I asked how long it would take to close, and he said he would have us in that house so fast that it would make us sick. I went to bed that night thinking that I was a homeowner, and regretting that I’d waited so long to pull the trigger.

I called him the next morning to ask an insignificant question and found out that he’d spoken to his district manager, and that the deal was off. My credit was most certainly an issue, and I would now need $10-20k down, or a solid co-signer. In other words, this had gone from a sweet, non-conforming deal, to a nasty conventional deal. I was not happy, as I’d been very up-front with the guy, and had been assured that it was all in the bag, but my unhappiness isn’t changing anything.

Suggestions? I’m open to anything at this point. I’m checking with everyone I know who has good credit to see if they would like to co-sign. It’s a very nice house with lots of potential. Just doing the plumbing, replacing the appliances, putting in carpets, drywalling, and painting the outside would raise it’s value to around $100k. We want to keep it for some years, and I’m looking forward to any creative ideas that y’all might have.

Re: Looking for help with non-conforming REO - Posted by Ed Garcia

Posted by Ed Garcia on December 09, 2000 at 18:30:19:


Being creative in a deal depends on what we have available to create opportunities from. Unfortunately we don’t know what you bring to the table. You’ve already stated that your credit is not up to snuff, and that the bank wants 10 to 20K down.

We know what you don’t have meaning credit and 10 to 20K down, but we don’t know what you do have?
We don’t know how long you’ve been on the job?

We don’t know how much if any down payment you have?

We don’t know if you have another asset that we can borrow against such as a car or truck?

We don’t know if you have a long term job and a credit union that you can get some down payment from?

Steve, you must know someone with good credit who will want to help you. If you bring the bank someone with good credit, the bank will work with him or her, as you know. I would offer that someone either a piece of the deal, or some money paid over a 3 year period of time.

Steve, I know that Beneficial Finance, Household Finance, and Associates are in Alaska. You might want to check with them. Their lending policies are less stringent than a banks.

With what little information we really have on this deal, other than you like the property and the value is there. We don’t have a lot to work with.

Ed Garcia