Illinois Investors Watch Out
The latest in Illinois, is attorney general Lisa Madigan wants to make it Illegal to buy houses in foreclosure, for under 82% LTV.
I guess that means that the shacks that nobody but investors buy, will sit their and be havens for drugs and gangs instead of being bought by investors and turned into nice homes, that turn into nice, safe neighborhoods, where people actually want to live. Also less tax revenues for the state because the houses sit empty and taxes have to pay for more police.
Sorry, I had to rant. I was so amazed what the politicians think will help the community.
LTV or FMV?
Jim
I would caution you that what you have described sounds a lot like lender fraud....
There are methods to pull out equity however they all require lender approval to be legal...
There are several methods for pulling out equity illegally but I am not so sure anyone would like to know how to accomplish that...
Good luck
[addsig]
There actually is no loan fraud involved , I am sure. For example, he could have used me to get the mortgage for the home - a straightforward purchase between me and the seller.
Yes, but then the sale price is set @ 100k with the seller receiving all the proceeds. How would you get the extra 30k back from the seller?
response to dirtman 89...... The investor would have a contract signed between him and the seller that has been signed by both parties and a notary-stipulating that the cash back comes to him. This is how he protects himself and prevents the seller from walking off with the money.
tonydicorpo your right-- he does justify it by noting its used for paying the back taxes taxes, ( repairs) etc... This is the essence of of my question, am just not sure exactly the wording of this contract to make it work. Thanks for your reply.
equityshotta,
If the purchaser has good credit, why not do a no-season re-fi to get the cash?
It is not illegal or that difficult to get cash back at closing, in fact I do it all the time. Sometimes I go to closing, bring no money, and walk out with a check on a simultaneous close. This is legal, and anyone can do it.
That said I rarely let the home owner stay in the property. Too many problems can arise from this, in some states that have strict usury laws a transaction of this type might be classified as a usurious loan.
If your going into a deal like this then disclosure is key to protecting yourself and your investment. You need to disclose everything including the fact that you intend to make a "huge" profit I would also have the homeowner sign something to the effect of:
"SATISFIED WITH THE SALES PRICE: I understand I may be selling The Property for less than market value but have chosen to do so because circumstances dictate that an immediate sale, even at a discounted price, is in my best interest. I am satisfied with the sales price and or agreement that I have negotiated. "
I would also make sure that they knew and signed a disclosure to the effect that they understand that "this is not a loan" this is a purchase. And that them staying in the house is a leaseback agreement etc.
An easy way to get money at closing would be to purchase with hard money at closing and then refinance it doing a rate and term refinance where the bank will lend 90-95% of "appraised" value (not purchase price).
This requires a lender that does not have seasoning issues, and has other somewhat liberal requirements. We have done several of these in the last several months.
[addsig]
I bought one last week that I pulled over $15K out at closing.
House worth 175K as is
1st mortgage of 96K
Private lender brought 35K to closing
I paid 20K to buyer to take over his 96K loan and I kept the diff.
could you explain more on the broker comp? I myself find this interesting and also in MN so I would like to know how that works. Thx