Posted by Randy (SD) on January 26, 2005 at 13:17:36:
The LTV “test” he’s referring to is most short sales must be 82% of fair market value (or thereabouts) minus repairs, and this scenario he is proposing a 61% LTV… the property would have to be in a serious state of disrepair.
I just aquired a propery in Texas that is 4 months in arrears for $1.00 down. I agreed to buy the property from the seller at $139500 and the property is worth about 145000. I have begun a shortsale with the lender for $89,000.
I have already sandwhiched leased it for an option payment of $6,500 and a price of $153500. What are the odds the bank will accept a shortsale of $89,000 on a $142000 home?
If they don’t accept my short bid will I still be able to bring the loan current?
two problems… the first is the perceived value… there is zero incentive for the mortgagee to entertain a preforeclosure short… the second, you may have stepped on your own foot by acquiring title to the property.
The majority of mortgagee ss criteria requires that the home be owner/mortgagor occupied, and the ‘relief’ be afforded the mortgagor… If the mortgagor is out of the picture… the proposed relief would not directly benefit the mortgagor, but a third party.
Even if they were to waive the owner/occupant requirement, it’s unlikely that the application would survive the LTV test.
Re: Newbie Foreclosure/shortsale - Posted by Pete(MI)
Posted by Pete(MI) on January 26, 2005 at 10:23:46:
Please define “the LTV test”. I know what LTV is, but I haven’t heard this context previously, and since I’m looking to do the same types of deals that George is, this info may be crucial to the success of a short sale deal. Thanks!
The question is what’s the value of the property to the lender. They certainly will have done an appraisal, usually a drive by. Next obtain the short sale package from the lender. Keep the borrower in the loop. It’s his liability. I believe Texas is a deficiency state so it’s in the borrower interest to short and clear the loan not let it go. The beneficiary may be able to get a judgement on both loans. Is the loan an FHA or VA loan? Different sets of rules for short sale. If conventional a short to the lender is feasible if they have something to gain. i.e. they will make more money selling it short than going to foreclosure.
Anyway an interesting problem and it would be a challenge.