Basic (hopefully) Question - Sub-to & Short Sale HELP?
OK- I am about to enter into a short sale negotiation. The seller has an appraisal for 163K- they tried for 6 mos to sell at 158K- they have already talked the company (I think Citi) into 149,500. They are not behind on their payments (yet).
Problem/opportunity- their home was built in 2000, and there is a new phase in their development where brand spankin new homes are going for 129-163K. I found a comp that is a little less square foot and 1 less garage for 129K literally a block or two away.
This is my first short sale deal. I was hoping to offer only @ 120K and offer that I take this deal over sub-to the current mortgage and re-amortize the current mortgage with a new balance of 120K instead of @ 158K.
Question- can you do a sub-to short sale at all? If you can, and you negotiate a new price, would you in turn negotiate a smaller payment? I need a bit of help???
P.S. the home has NO upgrades from what I can tell.... Vinyl and basic carpet- no tile or hard wood, etc.
[ Edited by fordecan on Date 02/09/2004 ]
i think i realize what you want to do, you want to take the deed (sub-to) but then be responsible for a smaller note ... right?! <IMG SRC="images/forum/smilies/icon_wink.gif"> i tried this too, on my first short ... BUT
in my experience, a bank will normally not allow a short sale bid to be approved if the deed is no longer in the homeowner's name. they will tell you not to take the deed. they sell properties free and clear (no clouds on title). in any case you will have to close on it if your bid is approved, so you'll be getting the deed anyway at the approved price.
also, when you make the offer, part of the package is your payment verification or proof of funds. if you don't have this, you may be rejected anyway. if you plan on using a loan secured from them, then i suppose you're ok. it appears to me that you are supposed to find your own financing or cash for the deal. thus, lowering your payment would be taken up with your lender.
this is only my experience with shorts though, please get other opinions.
good luck however it works out![ Edited by jackman on Date 02/09/2004 ]
i have done something similar , where is, i had the home owners do a work-out plan or forbearance to the point of forgiving cost of foreclosure and interest etc and tacking the arrears on the end..we then shorted the second 60% due to the imminent threat of foreclosure, which the first did not dispute..i then paid off the second and bought the property via a sub-2 transaction and am now going to market the property retail or lease/purchase for 18 plus months with nothing to pay in arrears..would something similar work on your deal?? hope this helps..
regards-pat
The sellers are not behind on payments yet or in foreclosure? I highly doubt the lender is going to give you that kind of discount and let you assume it subject to. There are a lot of variables here as well. Is this and FHA Insured or Uninsured loan? Who is the lender, etc..
It does not seem like you are too sure if you really know if this is a great deal or not based on the comps in the area?
There are some great short sale programs for sale on this site that you should purchase to educate yourself. The short-sale pro has one.
Normally the lenders wont do one unless the people are behind in payments or in foreclosure, and then there needs to be a hardship situation. They will also want to see a HUD-1.
Best Riches,
Jeffrey Adam
[addsig]
Thank you for your responses...
The lender is Citibank (I think). There is a first and second. Both with them.
The homeowner did already provide the lender with all of the docs necessary to present the case that this will end up in forclosure- so they have been very proactive. The cool thing is that they are not at all behind on their payments (yet).
You are right- the area where this home is - you could present a case for comps anywhere from 129K to 160K. I am not going to offer more than 120K if that. There is no damage to the property, but there are no upgrades to warrant anywhere near the 160K range either.
I guess my basic question was - could I do a sub-to short sale? I am hearing from the responses so far that this is not possible?
I am thinking the only way for me to make money on this deal is to do a short sale due to comps. I guess what I should do is see if I can find a HML to back me up if I cannot do the sub-to short sale combo- use the HML to get the house and then re-finance a short time later... I HATE paying all of those loan fees though! AARRRGGHHHH!
Any other thoughts?
I'm pretty sure that they won't take a short sale if the owners are current on payments. I've never heard of a bank taking a short sale when payments are current. As I say this I am expecting somebody to post and say that they had it happen to them. You can always try - as it will not hurt.
Ryan J. Schnabel