wraps and foreclosures - Posted by Mark Craven

Posted by JT - IN on May 04, 2001 at 23:27:15:

I like the approach of doing the wrap, or taking property subject-to, with a L/O back to owner in foreclsoure, provided the equity that they are about to lose, and you are about to gain, if/when they default is substantial; 25 - 30%, or more, and house is a nice house; not JUNK, and people are NICE people, not A$$H@@@@!
This obviously would not be a prudent approach with all folks in foreclosure, but I do work foreclosures intensly, and some of these folks have gotten behind on payments for a very legitimate and understandable reason and circumstance, and can simply not get caught up. Have good income, etc, but need a new start. If they screw-up new start, bingo; you evict and they loose option at regaining equity. You get the 25-30% equity, less expenses to manage the tenant until out.
Have brief experience with doing this concept. People are very wary of this, as they should be. I can cash flow 2-300 mo positive CF and make 10% of FMV of house on the option. This is a WIN-WIN deal, if they perform, and exercise their option, or a I WIN BIG- THEY LOSE BIG, if they don’t honor and treasure this golden opportunity to escape 4closure.

Just how I approach this…


wraps and foreclosures - Posted by Mark Craven

Posted by Mark Craven on May 04, 2001 at 04:44:29:

I’m a newbie mortgage broker working hard equity refis on les piendings. My question is, I would like to bypass the lender, purchase these properties and then do a wrap around mortgage for the current owners, how do I do this? Most of these owners want to stay in the properties and resolve there foreclosure. The properties I target have at least 60 to 65 LTV. I figure if the owners default on my loan I take back a property with good equity. I can make money on the spread of interest rates, also. Most hard equity lenders charge between 13-18%. Thanks in advance for any advice.


Re: wraps and foreclosures - Posted by Ben (FL)

Posted by Ben (FL) on May 04, 2001 at 08:30:03:

Be careful with this approach. If the homeowners got into trouble in the first place becuase they could not make their payments, then how can they make an even higher payment to you?