Re: My thoughts… - Posted by Sean
Posted by Sean on May 23, 2005 at 10:39:38:
Well I guess read it differently… I didn’t read him paid 15k for 50k of equity, but 15k for 50% of house… which was 50k of 100k house.
I didn’t read this as a 100k in equity… if she had a 100k in equity, she could have fire saled it way back when investor #1 showed up…
Maybe I misread, but way I read it, he bought 1/2 stake in a 100k house for 15k… not 1/2 stake into house with 100k in equity.
Re: Nightmare owner - Posted by JohnBoy
Posted by JohnBoy on May 23, 2005 at 12:54:47:
We only have one version which is your version. We have very little facts to go on because you don’t give all the facts. You make a long story short and sum it up in your opinion this investor took advantage of her.
So what are the facts we know so far?
Investor gave her $15k cash to bail her out of foreclosure in exchange for 50% of her equity, plus the $15k he gave her.
She defaulted a year later, again, and now she can’t pay.
She’s in trouble, again.
The investor wants his money. Completely understandable!
The house is worth $210k.
It will take $100k to pay off the first.
So there is $110k in equity.
$65k belonging to the investor (his $50k + $15k)
$45k belonging to her.
These are the only facts we have to go on.
Based on those facts, it’s pretty obvious. She messed up again, now he wants his money (who can blame him), she can’t pay, so she’s crying victim that was taken advantage of and wants to file BK in an attempt to save her house.
For what??? SHE CAN’T AFFORD THIS HOUSE! She’s went into foreclosure now twice in the last year! SHE CAN’T AFFORD THIS HOUSE!
Simple solution! Sell it. Pay the investor his $65k and THANK HIM for all his help and making it possible for her to keep $45k of her equity! IT WAS A GIFT! She could have lost it all had he not bailed her out!
OR,
See if the investor wants the house and agree to deed it all over in exchange for her $45k equity, minus all costs to bring the loan current. Then the investor gets his $65k equity. She gets what’s left of her $45k equity after covering the costs to reinstate the loan. Everyone is happy! She can move on and get a place she can AFFORD to live in!
Otherwise, it don’t matter what she does. She can cry foul all she wants. That ain’t gonna help her at this point. She’s in FORECLOSURE, again!
The foreclosure isn’t going to stop while she messes with taking the investor to court. That has nothing to do with the lender. The foreclosure will continue. So in the end she will lose it all!
If the investor was smart, he would just let her lose it and wait for the sale. He can either bid it up enough to at least guarantee his $15k back or if no one else bids, he can buy it for what’s owed on the first! Either way, he at least gets his $15k back or ends up with the property and ALL the equity. Either way she ends up with NOTHING!
So if I were her, I’d quit worrying about playing the victim here and wake up! Work something out with the investor. Or sell the property and pay him his cut and take what’s left and move on. Or lose it all in the end!
Let’s start at the Top - Posted by Killer Joe
Posted by Killer Joe on May 23, 2005 at 12:30:52:
Hi Brian,
Since I posted the links to the legal opinions relating to your post, so you would have some insites into how the law will look at this situation, I have been trying to follow this without regard to forming any opinion myself.
I had better luck following the OJ trial. Perhaps you could repost the situation, including all the relevent new information, so others such as myself could perhaps help you find a doable solution.
This thread has been too contaminated by the start-stop-start again, try to add this and try to add that, accumulation of facts.
KJ
Re: As we dig out the facts - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on May 22, 2005 at 20:19:59:
I guess that I don’t understand why the investor should roll over and play dead while the other individual uses up all of his investment. There is a big difference between a loan and a purchase, if you do not know the difference or are just ignoring the difference then you have no qualifications to give her advice. None. Zero.
Just buy her a gun and tell her to rob banks, or private investors. Nine out of ten are never caught, so just tell her to do this scam nine times (not ten). If she never gets caught then she will never have to face reality, right?
She had a long period of time while she was operating on the investors money. Did it ever occor to her to sell the house during this time frame, and just take what was rightfully hers from the deal? Would have been something. Now it may be nothing at all. That would be a reality check. It appears like she has the “want it all” entitlement mentality. It appears that your advice is not anything to write home about either.
Open my heart, sure thing. I do this all the time to the needy. I do not however like a scam. Perhaps she will have to take responsibility for her own actions, then she will become worthy of some charity.
Re: As we dig out the facts - Posted by Anne_ND
Posted by Anne_ND on May 22, 2005 at 17:26:09:
Brian,
This newsgroup is for people who want to make money, so I think it’s a little unfair to post a question, get responses from experienced investors who all pretty much say the same thing and then pooh-pooh their advice because “money is not the most important thing in the world”. You’ve changed the rules on us midstream.
From what little info you’ve posted, I agree with Ed and the others, it sounds like the other investor did NOT take advantage of her, it sounds like she got help, she did not change the bad habits that got her into this situation, and now she needs more help. If she wants to stay in the house, she needs to meet her obligations- period.
Personally, I do enjoy helping people and I’m happy to give to charity, I just like to help those who help themselves and I like my charities to be tax-deductible.
I don’t think you should accuse Ed of not having an open heart because he disagrees with you on this situation.
Anne
Re: additional information - Posted by JohnBoy
Posted by JohnBoy on May 21, 2005 at 22:04:25:
The option consideration is $13k. I assume this was the consideration paid to give the seller enough money to reinstate the loan when she was in default the last time.
But the “option consideration” is $13k. The consideration is the money paid to buy the option. The option is for buying half the interest in the property. So what is the option price to be paid to buy the half interest? Option consideration and the option price is two different things.
Option consideration is the amount paid to obtain the option. The option price is the amount paid to exercise the option and buy the half interest.
It states he can buy the interest for $10k if she defaults. But what is the option price he would have to pay if she didn’t default and he wanted to exrecise his option and buy half the interest?
Something is missing here.
Re: Seller needs serious Help! Please help - Posted by Killer Joe
Posted by Killer Joe on May 21, 2005 at 24:58:54:
Brian,
Just in case you are still researching this subject late into the night, here’s one more link…
Go to - http://search.leg.wa.gov/pub/textsearch/
and in the box marked “Bills, RCW, WAC, and State Register:” type in;
AGO 1981 No.9
The link and text I gave you was for “AGO 1980 No.12”
If you need to you can check the box for Attn General Opinions.
HTH
KJ
Re: Seller needs serious Help! Please help - Posted by Killer Joe
Posted by Killer Joe on May 21, 2005 at 24:07:42:
Hi Brain,
I emailed you the text of the link. Let me know if you need anymore help understanding the text, or I how found it.
KJ
Re: Here are the numbers - Posted by Brian_wa
Posted by Brian_wa on May 23, 2005 at 12:45:27:
What you’re saying does make a lot of sense. I’ll have to look into this more closely and perhaps see if I could help this investor and the owner find a good solution.
Brian
Re: My thoughts… - Posted by JohnBoy
Posted by JohnBoy on May 23, 2005 at 11:29:28:
owner of a house got into preforeclosure situation a year ago due to a big medical problem. An investor offered to lend her 15k in exchange for 50% interest in the property, which was like 50k, in addition to his 15k investment. Due to the constraints, owner agreed.
Now, one year later, she got into foreclosure again and this investor wants his 65k or so now.
“An investor offered to lend her 15k in exchange for 50% interest in the property, which was like 50k, in addition to his 15k investment.”
Nowhere did he say it was a $100k house. It just says he purchased 50% of interest which was $50k plus his $15k he gave her, for a total of $65k.
Maybe he’s not clear enough on this, but I would only consider any interest being real equity, not including anything owed on the property. Anything owed on the property really isn’t any interest since that is money owed to the lender. Any interest would be equity. So I would take that to mean there is a $100k in equity here.
If all she had was $50k in equity, then he really bought 100% interest since the rest of the value is owed to the lender. Which means he took all the equity plus his $15k which means she would owed $15k more than the house is worth.
If you had a $100k house that you owed $50k on, would you consider half the interest in the house to be the half that is owed to the lender, or half the $50k in equity which means you would be selling $25k of your interest which is 50% of the equity?
Re: My thoughts… - Posted by Sean
Posted by Sean on May 23, 2005 at 10:47:12:
Jeez… I need sleep… Saled… not only invented a new word… but spelled it wrong to boot! SOLD… sorry.
Re: Let’s start at the Top (Here’s the recap) - Posted by Brian_wa
Posted by Brian_wa on May 23, 2005 at 12:44:05:
He also asked the owner to sign a notarized doc. detailing the transaction and the whole story.
That’s pretty much all I know…
Brian
Re: As we dig out the facts - Posted by brian_wa
Posted by brian_wa on May 22, 2005 at 22:38:59:
Apparently this is a cross between a loan and a purchase. The investor wants a purchase but also set this up as a loan (deed of trust) to protect his investment. This guy doesn’t even know what he wants or maybe he wants too much as well.
Say whatever you want. If you think that every investor is treating all sellers fairly then perhaps you should wake up a bit.
Brian
Re: As we dig out the facts - Posted by Brian_wa
Posted by Brian_wa on May 22, 2005 at 20:17:25:
I don’t think this newsgroup was made specifically for people to make money. That’s just too narrow of a definition.
You don’t know her situation so I don’t think you should make that kind of assumption. There are good and bad investors just like there are good and bad homeowners. If you think this investor did not do anything wrong, then so be it. Let the court of law determine who’s right and who’s wrong. This investor should have plenty of money to seek the best defense for himself…
The past 3 sellers I dealt with knew I stand to make money through buying their houses. Some even knew before and during the selling process that I would make a lot of money but they all were happy because of the way I treated them. Two of them actually became my friends now. I’m proud of this and would prefer to do business this way unless proven wrong in the future…
Brian
Re: additional information - Posted by Brian_wa
Posted by Brian_wa on May 21, 2005 at 22:08:11:
The option price is $1.00. I got it straight from the contract between the investor and the seller.
Re: Seller needs serious Help! Please help - Posted by brian_wa
Posted by brian_wa on May 21, 2005 at 01:03:35:
Thanks for your help!
Re: My thoughts… - Posted by Sean
Posted by Sean on May 23, 2005 at 12:47:21:
“Nowhere did he say it was a $100k house. It just says he purchased 50% of interest which was $50k plus his $15k he gave her, for a total of $65k.”
A 50% interest in a property is 1/2 ownership… his interest then is not limited to 1/2 the equity in the property, its 1/2 the property… I don’t know where you came across the idea that 50% interest means 50% of the equity… but that sure isn’t what it means in my book.
50% interest is 1/2 ownership, it it is not a portion of the equity. If the house is worth 400k and has 100k in equity, and the guy paid 15k and got 50k of the equity, he bought a 1/8th interest in the property… not 1/2 interest. 1/2 interest is always 1/2 the value of the property.
Again, I don’t know where you got the idea a purchased interest is only related to equity. This certainly is not the way I have ever seen the term used or defined.
the recap) - Posted by Nike
Posted by Nike on May 23, 2005 at 13:40:09:
If you want to help her have her counsult a good bk attorney. The majority of bk courts recognize options agreements as executory contracts. Bk. Trustees have the discretion to set aside executory contracts. The investor was sloppy- he tried to be clever but he’s dumb. He secured his investment by recording a mortgage yet he’s calling it an option. He can’t have it both ways. The penalty portion of the agreement will not stand. If an attorney gets involved the investor will likely back-off as he likely does not want the deal scrutinized.
Do you know what interest rate applies to the deed of trust? The investor created the problem by structuring the deal the way he did.
Re: Let’s start at the Top (Here’s the recap) - Posted by KIller Joe
Posted by KIller Joe on May 23, 2005 at 13:23:08:
Thanks Brian,
Putting off the inevitable is always a losers game. The investor has done his homework on this one and should be in a position to capture the gold here. Whatever the reasons are for you trying to help her, you came to the party too late.
My guess is the investor smells blood in the water and was prepared for this situation. Forget the moralities here, your friend isn’t concerned about doing what is best or she would have sold the property by now. Sorry, that’s just obvious, zebras never change their stripes. If you want to make this a life long crusade, go ahead, you have to account for 24 hours a day anyway, so just remember this…Most situations like yours will eventually fall into the “Won’t get credit for it, anyway” catagory.
If you haven’t found this out by now, you will get a first class lesson on the subject if you continue.
I apprieciate your desire to help others, I post for the same reasons. Don’t feel your time is wasted on being a Good Samaritan. It’s not, there are just no gaurantees your time will be ‘productive’.
Years ago I had a girlfriend that drove by a homeless man everyday on her way to work. She went out and spent $200 on a jacket and other things her brain told her he needed. She came by the next day and found out he had traded all of her stuff for some stuff that coinsided with HIS VALUES. You can guess what those were. She doesn’t do that anymore.
If your friend doesn’t see the opportunity to walk with $10K, perhaps a little explaining on your part about her options will be the most you will accomplish here. In any event, good luck, I wish we could get the investor to post his side here as well. There are a lot of lessons burried between the lines on this one.
All the best,
KJ
Re: Sounds a bit like - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on May 23, 2005 at 06:32:19:
the pot is calling the kettle black.