Posted by David Butler America’s Note Network on August 10, 2000 at 19:32:11:
Your thinking is on track, but the situation you describe is going to be very tough for any knowledgeable note buyer to swallow. With a 550 fico, 10% down (or 5% down, 600 fico), and proof of stable and reliable income (minimum 2 year history) there is a possible chance for a simultaneous close. Seller would get about 87% to 90% funding on the sale of the note (with a minimum discount in the neighborhood of $5,000 or so). With no down payment, and shaky credit, he would be lucky to get 50% ITV on the note, if that.
So, this particular scenario probably not fly as you present it. You need to find a way to bring some equity to the deal, or have the seller lower his expectations about cash available at closing, or more likely, both. Best wishes for finding something that works.
David P. Butler Vice President, Broker Relations
Please tell me if this could work!(long) - Posted by Lesley C. in stl
Posted by Lesley C. in stl on August 07, 2000 at 16:49:02:
Here’s the situation. A friend of my husband’s has a mortgage company and owns a SF 3 bedroom home in a nice neighborhood. The home appraised out at 72k, as is-needs @ 8-10k worth of repairs. It has been sitting for @ 1 year. My husband and I want to live in the house but have no money for a down payment. However, my husband is an independent contractor and can do the repairs to the home. Our credit is not so good either. My question is…if my husband’s friend created the note for us using owner financing, could I(acting as a note broker),set my husband’s friend up with an investor to buy the note at the closing table and I get a commission check out of the deal? Or would that be illegal? My husband’s friend said that if he could get a little more than enough for the house, he would give us the repair money, knowing that my husband would do the necessary repair work and then some. But he needs to be able to at least double his investment. Which he will not do if we try to get approved through a bank. Do I make sense to you? How can this work out, or can it? Please let me know if I need to give more info. Thanks so much!