Can I Modify The Loan Balance On A Subject 2
Has anyone tried talking to the bank and modifying the loan balance before structuring a subject 2. The reason I ask is that some of my recent calls are very upside down and I know I can find a tenant but I want to at east cover the payment w/ management and cash flow a little. I structure them in a land trust so the dos clause is not an option. Please help, I hate passing on deals.
You could get the current owners to work with the bank on adjusting terms, then take it over. Of course, they may get better terms and want to stay. It should definitely come up in the conversation with the homeowner.
1) This is not OO, so pretty much forget a loan mod
2) Beware of the DOS. I understand Lenders and Title companies are being very meticulous and I have seen lawsuits where land trusts were pierced due to dodgy trustees structure.
3) Rates are historically low, why did the payment go up? Is it a neg am loan? That is ~a 50% increase.
4) Have you thought of buying the note from the lender and have the current owners do a deed in lieu or just foreclose with no opposition. The risk is the owner’s right to cure and being “stuck†with the loan.
So has anyone had any success in doing a cashout refinance of a subto property? If so, what lender did you use? What was the seasoning requirement?
Back to my post on the 7th, fix and sell the place. You should be able to recoup your repairs and could even split the profit with them for your time and trouble. That would make it a win for the bank, you, in-laws, and whoever buys it. Additionally it would get them out of a bad situation and into most likely a nicer place with a little cash too...
Hope it works out however you decide to proceed.
My rule is to never ever leave the owner in the house that is being foreclosed upon. Here is my reasoning:
1. If they did not pay the mortgage payment to the bank chances are they will not pay me either (even rent).
2. In our state of Illinois there are usury law considerations (even if you never promised to sell it back to them).
I would simply do a S2, offer them a small amount, fix it and rent it to someone else. Sounds like they are ready to move anyways.
If you are not in a hurry to get your money back, take the deed subject to, cure the default, and make whatever repairs are necessary to put the property in rental condition.
Consider the property as a second home and let your inlaws stay rent free. They are already giving you quite a bit of equity in their home, so why charge rent on top of the gift you received.
Some lenders will refinance a second home after one year of title seasoning. Expect 75% LTV maximum loan amount and ask for the same interest rate available to owner occupant homeowners. If the repairs are not too pressing, ask your lender for a FHA 203k rehab loan, or. just finance the rehab with a HUD Title I home improvement loan.
Technically, these loans are reserved for owner occupants, but as long as the property is a second home that you are providing for your in-laws, you might qualify.
It is best if you consult a real estate agent for you will have a definite answers on your queries.
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