PRE-FORECLOSURE HELP NEEDED - Posted by Mark Dowd

Posted by MRWI on March 13, 2003 at 12:17:07:

Set up a trust and then use a warranty deed to trustee form to have her deed the property into your trust. Once you have the deed, call the bank and let them know you have it and try for the short sale. If they say “no short sale for you” then you can either assume the loan in your name, not a great idea, make up the back payments and try and keep the loan in her name, better, or just assign your trust to another investor or retail buyer and collect your assignment fee.

PRE-FORECLOSURE HELP NEEDED - Posted by Mark Dowd

Posted by Mark Dowd on March 12, 2003 at 22:38:55:

I spoke with the owner of a pre-foreclosure today. She just wants out, with a little money in her pocket, so she can start over. The numbers are as follows:

ARV: $125,000
Balanced owed on first: $89,000
Fix-up (minimal): $3,000-5,000
Additional Liens: none, according to the owner, but I will check

I am going to fax an “autorization to release payoff” form to the lender today. Probably take a couple of days to hear from them. My question is, will the lender consider a short sale? I thought about offering $65,000-70,000 and see what happens. I also suppose I could get the deed subject to, bring the loan current, fix-up, and resell. Does this sound right?

I have the cash to purchase outright but have heard that the subject 2 method can allow me to minimize the cash I have in the deal. Any suggestions on how to proceed?

Thanks alot to all those who help. I have been investing for about two years now and it seems you can always learn something from this board.

Mark

Re: PRE-FORECLOSURE HELP NEEDED - Posted by mrwi

Posted by mrwi on March 13, 2003 at 10:43:49:

I would get the deed if at all possible!!! Just ask for it and explain to her that you need it for leverage with the bank. Once you have the deed, let the bank know that you have the deed and would like to talk to them about a short sale. IF they say not interested you can try and play hard ball and let them know that you have the deed but if they are not interested in working with you, you can not be responsible for the property since you do not have any interest in it. OR you could just bring the loan current and do what you want with it after that. It looks like there is enough equity here to just make up the back payments. You never know until you ask!!! The worst the bank could say is “sorry, no short sale for you!”.

Re: PRE-FORECLOSURE HELP NEEDED - Posted by IB (NJ)

Posted by IB (NJ) on March 13, 2003 at 08:45:48:

I’ve known of short sale cases where the lender didn’t know the fmv of the property and ok’d the short sale. I have a friend who made $25k off a short sale flip where Bank One didn’t know the true value of the property. Of course they didn’t require an appraisal so that made the difference. If all they require is the standard information (pictures, hud1, hardship letter, etc.) and NO APPRAISAL, I’d go for it.

Re: PRE-FORECLOSURE HELP NEEDED - Posted by Michael_NJ

Posted by Michael_NJ on March 12, 2003 at 23:42:11:

Mark,

How did you find this motivated seller? What are your methods?? I would appreciate much the input!

Michael_NJ

Re: PRE-FORECLOSURE HELP NEEDED - Posted by Kristy-AZ

Posted by Kristy-AZ on March 12, 2003 at 23:28:52:

Mark,

I’m no Pro when it comes to short sales. But from the looks of your numbers, I doubt the bank will short sale because they will more than likely get their money back from the auction.

Looks to me you are better off buying straight out or if she agrees do the Sub-2.

Just my thoughts on this one.
Kristy-AZ

Re: PRE-FORECLOSURE HELP NEEDED - Posted by Mark Dowd

Posted by Mark Dowd on March 13, 2003 at 11:02:47:

What is the best deed to use. A quit claim, special warranty or general warranty? Also, if she is willing to do that, will I then assume the original note with the banks approval, or just simply continue to make the payments until I sell? Thanks alot.

Mark

Re: PRE-FORECLOSURE HELP NEEDED - Posted by Mark Dowd

Posted by Mark Dowd on March 13, 2003 at 09:48:25:

Thanks for the help. I need to move quickly on this deal since the sale date is April 1. What forms are necessary in order for me to take sub 2? What steps are involved in the process? I have a basic understanding of the sub 2 process but I have never done one of these deals.

Also, the house is in pretty good condition so I am skeptical as to whether the bank will accept a short sale or not. If not, then there is still pretty good equity in the house, about $35,000. I have a private lending source but I would rather be into the deal with less money at risk, i.e. subject 2, than use up those funds to buy outright at $90,000. Any further suggestions?