Need A Little Info On Pre-foreclosure Process
I have been on this site for quite a while and have only taken little action towards investing. I just need a few things cleared up before I start to dive into REI.
1) when state to a defaulting homeowner that you will pay their debts, how does this process work?
Do you have to tell their lender that you are doing this?
Can the Lender deny the action or does this only apply during a short sale?
If you dont have to talk to the lender, how exactly would you pay their debts? Do you have them sign the deed over to you immediately and then pay the debts. What would be the exact steps?
One more question:
How would you determine the amount to give the defaulting homeowner to accept this deal? What is a fair amount because I really do want to help these people?
I am sorry if I am being a pain in the butt, but there are quite a few details that I must know. I have searched the forums and there is a lot of helpful info, but most of the information is general and does not mention the exact process. I am just a little nervous of finding a deal and then hitting a wall and not knowing what to do because I did not ask the right questions.
I would like to thank everyone in advance for helping me out. Thank you soooooooooo much. 
Your questions are relevant to the problem. I need more information.
What is your deal with the owners? What are they giving you in exchange for advancing money on their behalf? Do they stay in residency? How do they repay your advances and over what period of time and at what profit to you or do you just own the house. Value of the House, unpaid balance on the mortgage of record. Any liens or judgements. How will you insure you have a marketable title. Lay it out for me and I and the other responders will advise. What state?
Cheers Lucius
tjm528,
Let's start with step one.
Step 1 - Find a motivated seller
It may sound funny, but you don't have to know Steps 2, 3, 4, etc before doing Step 1.
I put my first short sale deal together last week. I was nervous on my way over to meet the home owner because I didn't know all of the right questions to ask. I didn't know what documentation, if any, I needed to get from the home owner. I wasn't clear on how to tell if I had a good deal or a deal I should pass on.
After the meeting with the home owner, I knew exactly what I needed to find out. I figured some things out, got some advice from an attorney, and did the deal.
You know the worst thing that could of happened? The seller could have sensed that I wasn't sure about what I was doing and decided to not do the deal with me. I would have invested an hour of my time (mostly travel time). That's it.
Don't get me wrong. You'll be dealing with people that are in situations and need help. If you make promises willy nilly that you can't keep, you'll be just adding to their problem. Collect information, find out what you can do, figure out your exit strategy. If you run into something you can't figure out, you have experience on this site to draw from.
Take action. Start with Step one and you'll be surprised how things come together from there.
Good luck!
Jamie
[addsig]
TJM:
JAMIE is K-REKT!
I always focus my presentation and subsequent actions around WHAT the OWNER ANSWERS to My Q.:
What Would YOU Like to See Happen???
Then I know whther they can afford to stay and plan a re-paymt plan or nedd to move with a little uhal money.
TJM you wrote:
Quote:
1.) when state to a defaulting homeowner that you will pay their debts, how does this process work?
I ask them what is owed, get a pay off amt from the lender(s), anddo a pre-lim look up of the title---then I write a check, open a line of credit, find an invetor /partner or tenant-buyer, and/or get the mortgage lender to do either a short-sale, forbearance or modification of the existing mortgage
Quote:
Do you have to tell their lender that you are doing this?
Depends on what process you are doing--if getting a forbearance or modification I act like it's going to be the original borrower repaying with my funds or strategy actually making the payment subj-2 the workout plan--again see #1
Quote:
Can the Lender deny the action or does this only apply during a short sale?
Not all strategies require that you do so...but in case of short-sale you definitely need the lender's informed cooperation...
Quote:If you dont have to talk to the lender, how exactly would you pay their debts? Do you have them sign the deed over to you immediately and then pay the debts. What would be the exact steps?
I set up LandTrusts and obtain the Power of Atty to do so. I also acquire a Deed (unrecorded) to complete the certainty of moving forward...getting it is just a part of my agrrement to take over responsibility for the repaying of the owner's debt...it's also very helpful to have to alay the concerns of title officers working to settle double-closing transactions and my POWER to DIRECT as the OWNER/PRINCIPAL conveying the sales transaction and RECIVE MY CASHOLA!!!
Quote:
One more question:
How would you determine the amount to give the defaulting homeowner to accept this deal? What is a fair amount because I really do want to help these people?
On deals hhaving EQUITY I always give FMV less my outlayed-costs and other transaction costs the seller would have incurred includi ng repayment of their arrears, atty s fees, back taxes, insurance, transfer taxes, RE commissions etc.
TJM:
As you can see their is a lot to be considered and each deal has it's own unique considerations...feasibility all depends on your Target-Mkt property selection, Adv for resell or rental, access to several funding options and/or benefits to tenant-buyers and investor-partners, etc.!!!
I truly hope this helps!
Derrick Ali
Thank you for the help everyone.