Question Regarding Short Sale Help
Ok.. this is our very first investment property. The house is worth 160k and is going into foreclosure at the end of August. The first mortgage I would like to assume (in other words.. have the homeowner deed me the house and I'll pay all his backpayments to make him current) put some money into it and tlc and put it back on thh market. I wanted to see if I can short sale the home equity line. Can I just fax an offer to the bank that has the home equity line along w/ some pictures and a hardship letter and hope that we can come to an agreement on closing the home equity line for less than what the homeowner owes?? otherwise I can't see us making any money on this deal??
So here's the other question. Is a short sale mean I have to buy the house and close on my own loan? Or can the homeowner deed me the home.. I assume their mortgage and fix it up to sell it in a month or two?? If I can get by without getting financing on my own, can I still try to reduce the amount of the home equity line?? Does a short sale entail going to a closing or does it mean deeding a house and an investor takes over the payments until the home is sold.
Is it true that if this homeowner indeed goes into foreclosure then the home equity line will go away. Do you think the bank will bargain with me? Any help would be greatly appreciated. The homeowner wants to sell me the house and move on and I just want a little more equity in the house. If I can greatly reduce that home equity line then I will have some equity.. if I can't I am afraid my first deal might not be so profitable at all. Suggestions?? Thanks again 8-)
Make sure these are the only two liens on the property... then, if you are doing a short sale, you have to deal with the bank and get approved.... unless you are going to do a subject to purchase. There are no truly assumable mortgages anymore so you could do the subject to. The issues are making sure that you don't do anything to make the lender invoke the due on sale clause...like having the deed changed to your name.
By all means, if you go to the home equity line lender and tell them you are working with Joe Blow, who will be losing his home to foreclosure, and that you can buy the property if they will accept a lower amount for their loan, they may agree, because as you said, if the primary lender forecloses, all subordinate mortgages are gone. So if it's take less or get nothing, it's a no-brainer. The trick is getting both lender negotiated into a position that makes it profitable for you... can you post the figures for the deal? Just curious to know ... what's the balance on each mortgage?
Wow and thank you!!!
So far I have a house worth 150k
This is after I put in at approximately 7k.
First mortgage he owes 97k
Home Equity Line is 27k
Homeowner will walk if I pay his moving expenses and first months rent/security deposit I figure about 7,500
I must pay all his back payments of his first mortgage which is 8k
back payments of his home equity line is under 300 dollars
The fellow wants to sell me his house. Do I get the financing or can I just pay his mortgage payments of $700.00 a month plus his fees and backpayments of 8k. In other words can I keep the mortgage in his name until I sell the house in a month or two?? Yes or no?
If so can I still try to short sale that home equity line??
I'm doing a title search tomorrow on my own to see if there are other liens. The owner wants to get out and quick.. he has a few more weeks until foreclosure.
Thanks for your help!!!!
Simple dollars 150 k worth
97,000 k first mortgage
27,000k home equity line
7,000 k in repairs
7,500 k for homeowner apt, moving, rent
8,000 backpayment and fees to reinstate first mortgage
Thank you thank you for your response!!
Definately try to short the second. The second will not know that you intend to keep the first mortgage in place. It is none of their business.
SS on the second means that you and the second lien holder agree to release their lein for less than what is owed. They are releasing the second position lien, it does not affect any other lien on the property.
SS can be quick, and they can take months. Fortunately for you, SS on seconds are usually the quickest.
Unfortunately for you, if you say the house is worth 150k, the first is 97k, and the second is 27k, then the second is protected. Meaning that if the house was foreclosed and put back on the market, the second would very likely get their full 27k back. This means that it would not be surprising if the 2nd does not want to short. But you never know unless you try.
You want the title search to make sure there are no other liens.... he could have gotten a home equity line of credit or had judgement against him that resulted in other liens. And of course, if he wasn't paying his mortgage, you need to make sure all the other junk is current... taxes, water, sewer, etc. If I'm not mistaken, they only go away if the foreclosure is actually done....
If he does have other liens (i.e. utilities, refinance, etc.) wouldn't that be covered under his bankruptcy? He said he is officially discharged of everything of all debt. Also, can I do the title search myself or do I have to go to a title agency? Thanks for your reply..this is definately helping.
Diane
You certainly can do a title search yourself, if you know how to do it. I always, always, always would get title insurance or at least a certified search from a title company.
It costs too little compared to any problems that could come up.