Help Fast - My First Deal!
I had my first response to a preforeclosure letter that I sent out. I am meeting with the seller in 2 days and am scrambling to figure out how to proceed. She appears to be recently divorced, so I need to check the deed to see if the ex husband is still on it. Any advice? I was thinking of buying the property sub to, bring the payments up to date (7 months arrears). I need to check for any other liens. What forms should I bring with me? Is there a standard quit claim deed? Do I need a LOA or can I just make up the payments? Will the bank think it is strange to receive a check for the back payments ($15k) from someone other than the owner? Or should I approach the bank with an LOA say I am buying the property offer to make up bank payments then look into refinancing? The auction is in 30 days. Also the owner would like longer than 30 days to find an apt, she has no family nearby...not sure that I should let her stay but she has 2 small children, works in the area and needs to find a place to stay.
I want to make sure I have the right forms, do my due diligence and follow the right process to purchase the home and stop the foreclosure. If I reach an agreement and she wants to sell me the property, do I fill out a quit claim? Do I need to drag everyone to a notary to sign it? Any help is appreciated! Thanks!!
Pushcart,
I too am a new investor. Are you planning on doing a short sale?
1) You want to get the deed from the seller WITHOUT guarenteeing to make up the payments.
2) Then get an authorization from her so that her lender can speak with you.
3) Fax the authorization and then call the lender and request a short sale package be faxed to you.
4) They will tell you the things you need to provide them.
If you make up the back payments, the bank will have no reason to discount the loan <short sale>.
My understanding is that this is a lengthy process and will possibly take months, that will give the seller additional time to leave.
This is my feeble attempt at an answer. There are many more that are WAY more qualified to answer and I will be monitoring to see what I left out. We will both learn at the same time.
Happy Hunting!
Zenobia79
Thanks for the response, actually I was not looking at doing a short sale. I believe there is enough equity in the house to take it over subject to or even refinance. I just need to know which forms to fill out, if I should approach the bank or just make up payments. How do I do this deal at the kitchen table? Do I bring everyone to a notary to have the quitclaim deed signed... If I make up back payments is the bank still going to look for money towards attorney fees from the owner?
If your just going to pay the reinstatement, and then pay monthly, your best bet, is to have her sign a quit claim deed, then make the payments until you refinance or sell the property. If you do a quit claim, however, after about 3 months, the bank will call the note, and want there money. So you will have to have refied by then, or sold it
[addsig]
Do I need to bring everyone to a notary to sign the quitclaim? also...how does the bank know about it and call the loan in 3 months...just curious. Are they noticing that someone else has suddenly made up payments and has taken over paying the loan?
Thanks for all replies!
Whooah! Why is everyone talking about a Quit Claim Deed (QCD)? I would definatly try to go after a Warranty Deed...
I am not sure what a warranty deed is. I have only ever seen quitclaims recorded at the registry of deeds. What is the difference? Is it more binding?
Anyone else? I am meeting tomorrow! Not sure which forms to bring? standard P&S? quitclaim deed? warranty deed(not sure they have this in MA? LOA?). Do I need to have anything notarized? Not sure where to find a notary it will be after 5pm. can I have the owner sign the quitclaim with consideration of $1.00 (would they do this??)then have a sales contract spell out the details of the amount...paying arrears, cash outlay to owner, subject to or refinancing contigency...any help is appreciated!! Thanks! :-?
Larry,
Is there any real difference between a special warranty deed and a general warranty deed?
Thanks,
JS.
Hi there,
I'm a relatively new investor in the middle of a similar deal. I took a house sub2 and offered to make back payments. We signed and notarized a purchase and sale agreement, LOA, warranty deed to trustee and CYA letter. The sheriff's sale is scheduled for May, but the bank is still willing to deal. They will accept the back payments in 12 installments in addition to the regular mortgage payments. I'm planning to lease option the house and use the option fee plus the monthly spread to make those additional payments. I expect my back end to be around $10K. Not a great deal, but to me it's a start. Hope I helped
Marzena
Pushcart,
Slow down a bit and lets have a look at your numbers. From the little info you give, 15k is alot of backpayments plus you would have to add on late fees and lawyer fees. Probably would be ? 20 - 25k? What kind of equity do they have? Perhaps, the bank would be willing to do a forebarence agreement, or short sale if those numbers are not looking too good anymore. Check for other liens and call her tonight and ask if Ex is still on deed and any other liens??
Bank would be happy to get backpayments and yes, $1 makes a contract legal. Ibackstrom(Larry) has some good info for you above. You can have her sign on the dotted line, contingent (have these in you contract) something like - property free of liens other than the 1st, and satifactory inspection of the property by a "business associate", which would give you more time to do your due diligence.
Kelly(WI)
Hi,
I spoke with an attorney, there are no warranty deeds in MA just quit claim. He suggests getting a signed p&S contingent upon clear title and inspection... I need to see condition before I come up with a price. Mtg balance, I am guessing is around $170k of which 15k is in back payments plus any penalties/late fees. fmv in good condition is around 250-280 maybe be higher, this is based on 2br she thinks one of the rooms could be another br. It sounds like 6/2/2 or 6/3/2...won't know until I get in to see. I have to factor in fix up, holding costs, atty fees... and see what I can offer. There has been an issue in MA with seasoning a loan if this is an obstacle I may need to rent for a year or rent to own before selling. It looks like I need to use an offer or agree upon a price and sign a P&S. Get an LOA and proceed from there? My atty said that if the bank's atty sees the P&S it will postpone the auction to allow the sale. any other advice? I am looking at the registry tomorrow to see whose names are on the deed as well as any other liens. I'd like to check the plot plan too. I am hoping this sale will go through, if not it has been a great learning experience (practice)and I feel I will be better prepared next time. I am going to try my best to make this happen though.
Pushcart,
Also don't lose sight of the sellers ex. If she recieved the prop in the divorce settlement that doesen't mean the ex is off title or no longer has an interest in the prop. I believe the court can order the parties to pass title that doesn't mean they did
You mentioned this early on, but it got lost in the shuffle. Do everything you have to to make sure she is OUT before you hand over any money or make up back payments. Roll up your sleeves and help find her an apt/house, and pay the deposit and/or 1st month's rent if you have to (don't volunteer it yet, though, unless she seems really down and out).
If she decides she likes this investor who just paid her up in full and is letting her stay 'awhile,' she may get used to it, after all, how can you beat free rent? What judge would look favourably on your plea to evict? Surely you would get her out, but when, and at what opportunity cost?
Make sure she knows it is your (and/or your mythical 'partner's') policy that you cannot fork over any cash or formally close until the premises are vacant. Also helps to guarantee the place will not get trashed in the process. This should be in your Purchase Agreement, too. Rent a truck and help her move if you have to. Happens all the time. Remember, things haven't been so great for her lately.
Also, if her ex hasn't quit claimed his interest to her, make sure either he does, or your lawyer is OK that it is not necessary. An important detail that's easy to overlook. Common property claims can sting you.
This has been great feedback from everyone-thanks!!
Right now the biggest obstacle I can see is if the ex is still on the deed. I should find out tonight or if not then through a title search (I will make this a contingency-clear title) If he is on it and divorce papers say he needs to deed this over to her then I will consult with my atty on how to proceed.
question about subject to ... Birddog 1 mentioned
"If you do a quit claim, however, after about 3 months, the bank will call the note, and want there money."
and Marzena mentioned
"but the bank is still willing to deal. They will accept the back payments in 12 installments in addition to the regular mortgage payments. "
if I use an LOA to find out what is needed to bring the loan current and then start paying the monthly payments is this a red flag to the bank, will they know that the property has been transferred and call the loan due? Has anyone been through this?
Thanks for all responses!
Hi Everyone,
Thanks for all your feedback! Everything is proceeding smoothly so far. Hoping there will be no glitches... I ended up consulting with an atty who will deal with foreclosing bank and handle the closing. I ended up going with conventional financing rather than subject to based on the divorce situation.
You say that the bank would stall the foreclosure sale if they see a P/S agreement. Sure, that's true. They'd love to sell the property....and get the loan paid off. They'll stop the sale for either a) if you're going to purchase the property and pay off the loan, or b)They're willing to work with you on a short sale.
From what you said, you're not trying to do either one of these approaches. It just sounds like you're trying a sub2.
Also, I'd be extremely surprised if your state doesn't have a warranty or general warranty deed. .....I looked it up and yes, MA has a statutorily defined warranty deed.