Getting A Discount On Your Mortgage When Refinancing (like A Short)
99% of the time when people refinance, they cash out the mortgages for 100% of the value. Is it possible, when refinancing, to get the mortgage holders to accept a discounted payment for payment in full (as if it were a note being sold at $.95 cents on the dollar) OR as if it were a short sale? Let's assume that this is a note that is performing well and is not in arrears.
I understand that the mortgage company won't allow the title holder to short a note, but you could get around this by Quit Claiming it to a third party (or a different LLC) and having that entity do it for you.
Who would you talk to at the mortgage company to do this? Loss Mitigation? How about to buy it as a note on the secondary market.....which department would you talk to?
We all know that a buck today is more valuable than a buck tomorrow (time value of money). This is standard practice in the secondary note market, but how can we take advantage of this when refinancing (instead of being taken advantage of).
If my logic is off, please correct me, but it seems like a good, sound idea to me.
the only reason I could see your idea working would be a senario similar to one created in the bond market. When yields go higher on bonds, people are willing to pay less for the original notes. For instance, Imagine you bought a bond and the yield was 3%. 5 years later, bonds are available yielding 9%. No one would pay face value for your 3% yielding paper. They woul expect a discount such that the price they paid woul yield 9%, when getting 3% on the face value.
So, if you have a mort with a 4% fixed rate, and the going rate becomes 9%, they may have an interest in having the 4% fixed rate note become finished. But you haven't really gained anything. The discount they would give you is because there is value in your 4% mort.
That is the way I see it.
[addsig]
Good though. I hadn't looked at it that way. Thanks.
nlsecor
That was well put. This is good food for thought...