Contaminated Well.Possible Short Sale? Calling All Gurus!
Hi group, I'm hoping you all can give me some input on this.
My sister lives in Houston, TX and is about to walk away from her house because of the devaluation of the property due to a carcenagen that has contaminated her well and some of her neighbors. Long story short, this neighborhood has been fighting this for 2 years+ to no avail. The company that dumped the contaminates for years has filed BK along with everyone else involved. The government has put them on the 'superfund", which will take up to 20 years to clean up. Presently, they( my sister and her son) drink bottled water. The weird thing is not eveyone's well is contaminated.
For example, her next door neighbor's is not but the neighbor across the street is. Also I told that the contaminated water can move over time.
Ok, here's the numbers:
1st--$73,000 @ 11.9% Mo payment- $760.00 (Payments are current)
back taxes--$250
Yr-1968
3/2 C/block
Approx. 1,500 Sq. Ft.
There isa drop in appraised value from 2002 to 2003 of $47,000. The appraised value is at $20,000. But it also shows a "market value" of $83,000?! I'm confused on this.
Also, there hasn't been any sales in this neighborhood that I can find within the past year. There are sales in surrounding neighborhoods(which aren't contaminated) that are appraising nicely.
I am thinking of trying to do a short sale even though the payments are current as of now. If this is possible, and I can get a short sale I plan on L/O to another buyer.
Or a SUB2 if I knew or felt strongly that I could get a buyer to pay close to fair market.
I wonder what kind of "disclosures" that I would have to present.
Would any of you even touch this deal? BTW, this would be my first deal.
Thanks in advance for any advice or suggestions.
Mitchell
Quote:BTW, this would be my first deal.Kind of like attempting brain surgery without having gone to med school.
Quote:
On 2003-10-23 09:41, flacorps wrote:
Quote:BTW, this would be my first deal.Kind of like attempting brain surgery without having gone to med school.
What's your point Flacorps? Are you here to help or to be funny?
Where you born knowing this stuff?
How did you learn? Did you ask questions?
Surely a Guru here has some advice or something of value to input.
Thanks,
Mitchell
Contaminated properties are called "Brownfields" and they sit for years without any productive use.
In many states, banks can't pursue the defaulting mortgagor of a primary residence for anything other than taking the property back.
Every payment made on that property puts the owner further behind (it has more in common with rent now than with ownership, except the owner still gets the mortgage interest deduction). Yes, they could continue to pay on it and live in it, but the better course is to see a lawyer and get debt relief. Regardless of blemished credit, the owners will probably be better off just turning it over to the bank and letting the bank take the brunt of the value loss. Sooner rather than later.
Thanks for the input flacorps.
This is what I came here for... to learn from the experts.
Mitchell
Is the structure movable? Find a lot nearby and get an estimate for a new foundation, utilities, etc., and moving the structure.
Then offer to purchase the property knowing that you'll be moving the dwelling.
If that sounds like something you would like to consider, PM me. Maybe I can help with the cost estimates. I've done one or two like this, before.
Wow shortsalepro,
I would have never thought about moving the structure. Can you do that with a concrete block house? If I wanted to call and get estimates, what kind of contractor would I look for?
Thanks for your reply.
Mitchell
I've only had experience with wood frame houses, but I suppose that anything is possible. Look in the yellow pages under House Movers.
I doubt that you could get an acquisition mortgage loan, so that would certainly exact an adverse impact upon it's market value.
The City of Ft. Myers moved an historical residence a couple months ago. It was huge and made of brick. They only moved it across the street, but I was amazed that it didn't crumble during the process.
Update---Spoke w/a RE agent in the Houston area on Friday, just to see what kind of disclosures I would have to have when I go to sell property.
Basically, she said as long as everything is disclosed to my buyer, then there shouldn’t be any problems. Also, she gave me a good idea of getting estimates for a new well (that would not be contaminated), and if feasible have a new well put in and then have the property appraised again. This may work, since some of the neighbors aren’t contaminated and some are. Based on my figures, after repairs, closing costs, RE agent commission, holding, etc, etc… the bank would be looking at -$15,000 equity.
Has anyone ever had a deal where you get the bank to pay you to take the problem off its hands?
Again thanks for your replies.
Mitch
In my experience (I live in NJ and have some experience in the migration of underground water in Brownfields....) an adjacent potable water source that isn't contaminated today may well be tomorrow. And if not tomorrow, then the next day.
Is City water available?
If so, what would the cost be to hook it up. I realize it may be completely unfeasible (running pipes 50 miles, ect), but it'd be anoth option to consider- either if keeping the house, or for ammo in a short sale.
HTH
~Matt
[addsig]
Thanks everyone for your input so far!
I am awaiting the Authorization for Release of Info and other docs, so I can start dealing with the mortgage co.
Has anyone dealt with Homecomings financial before? If so, any tips or advice would be welcome. Thanks in advance.
Mitch
BreyerConstruct,
No go for the city water... too far out.
Good suggestion though. Thanks!
ShortSalePro,
You sound like you've maybe dealt with something like this in the past. If so, how did you solve it and what was you're exit strategy?
Thanks,
Mitch
Followup:
I am starting the process of short sale trying to help my sister. Below is a note that she wrote to the mortgage company to help build the case. Since this is my first one, would you all be kind and critique it. I am open for ideas and comments. Thanks in advance.
To Whom It May Concern:
This letter is to inform you that I cannot make any further payments to the above referenced
loan. Due to unforseen circumstances beyond my control and major problems related to this property I feel that it is not in the best intrest for my family's health or future. The physical address of this property is .
I am a single mother of two teenage boys and feel that our safety and health are at risk if we continue to dwell in this house. I have worked 2 jobs for over 2 1/2 years to pay for our house while trying to keep up with the endless repairs. This was a decent house when I purchased it in 2000, however, "decent" doesn't come close to describing it in it's current condition. The repairs and cleanup that are needed to restore this house to liveable conditions again are beyond my financial reach at this time.
Please find included an ongoing list of problems and areas in need of repair as of November 25, 2003. As you read thru them please understand that these are only the problems with highest priority.
DAMAGES, REPAIRS & PROBLEMS REQUIRING IMMEDIATE ATTENTION TO MAKE THIS HOUSE LIVEABLE:
*House flooded in 1998- I was renting at the time.
*House flooded in 2001- This house is not in a flood plain so I wasn't required nor did I have insurance at the time of flooding. House was never repaired to normal conditions due to lack of extra money needed to do so.
*Posssible mold damage involved since I never got to replace all of wet sheetrock in outer walls.
*July 2002- found out our well water is contaminated with TETROCHLOROTHENE- a cancer causing dissolvent used in dry cleaning facilities. Bell CLeaners was dumping this chemical into the ground over 10 years ago and has contaminated many wells in the area.
ESTIMATED CLEAN UP- 18-20 years
*septic tank has problems, sewer backs up into my son's shower at least 4 times a month.
*toilet in guest bath has had plumbing problems over 1 1/2 years. Tried to repair on numerous occasions but still problems with it.
*Back door to house leaks & is seperating & cracking above the frame of the door.
Cracks in ceiling in extra room........could be a cracked slab?!?!?
*driveway destroyed by 2001 flooding. Huge pieces broken in driveway..impossible to park.
*We cannot drink the water and have to get water delivered to the house. Another expense associated with water contamination. Not real sure that it is even safe to brush teeth or bathe in but we have been doing since moving into the house.
*I have been sick with allergies since the last flood while living in this house. Never had them prior to the flood.
*Guest bath also has a small sink cabinet with door that fell off after the flood. We have tried to repair and it keeps coming off. The only way to repair is to take the whole cabinet out and redo the ceramic tile in the whole bathroom.
THAT WAS THE SMALL LIST!!
Last and most important. I received a letter from the Harris County Tax Office valuing my home at $20,000. WOW! Understand my frustration when I say...this house is valued at nothing as far as I am concerned. I bought this house as an investment and home for my family. The value of this home will not increase until the year 2023, (guestimated by TCEQ for clean up time) My investment has turned into a money pit and is on a Superfund List with the TCEQ!!! In case you're not familiar with this term it is like an ugly waste site you see on T.V. but it is under ground instead. Remember this is a dangerous chemical that is traveling under the ground in my neighborhood and in the water we are still batheing in and brushing our teeth in.
Due to all of these issues that need to be resolved, I hope you will see that this house is not worth even $20,000. I ask that you please release me from any further mortgage payments or liabilities that are associated with this loan. Would you want to pay for a house that is worth $20,000, when only 3-4 years ago appraised at $93,000?
Thank you for your careful consideration to release me from this obligation. I would also like top ask for this to be a priority so that we may settle this and release me from this nightmare as soon as possible.