It costs the bank less to short sale than to foreclose. but sometimes people running the banks are blind to that fact. so you have to paint the picture to the loss mitigation Dept. CFD = contract for deed. Short sales can be a real hassle, but can pay off well.
CFD = Contract For Deed.
If you do a Forum search and Article search you should find some good information on this site about them. But here’s a quick description I pulled…
“In a traditional mortgage finance transaction, title to the property transfers to the buyer on sale. The buyer borrows the money to pay the seller in full, and then gives a mortgage back to the lender. With a contract for deed, however, title stays with the seller. The contract will provide for a purchase price and monthly payments, and provide that if the buyer completes making the specified payments, the owner will then provide the buyer with a deed to the property. Contracts for deed are often used for short-term financing (of a few years or less), and may contain a "balloon payment" clause. The contract is then said to balloon on a specified date at which time the entire outstanding and unpaid balance of the purchase price will be due and payable. The hope is that the buyer will be able to use the contract period to find and qualify for financing.”
My first recommendation would be to have them talk to their lender to see if they can work something out. If nothing else, it may buy them some time.
If they wanted to sell it themselves, I might suggest them offering something like “No Qualifying! Only $15,000 down, Only XXX per month (etc.)…” and then they structure a CFD for a year or two.
If you wanted to take it over Sub-To, the loan would stay in their name, but you would need to be ready to bring their payments current and keep them current, and then turn around and offer it for sale the same way as above. But there’s no reason you couldn’t be looking for a buyer now -- before you ever took it over.
Some of the moderators on this site have excellent courses and materials on these types of transactions -- John Locke, John Michael, etc. (Am I allowed to promote you guys?)
When it comes to the bank taking a loss or doing a Short Sale, I’m afraid I’m can’t offer much help. But again, search out moderators like TheShortSalePro and look at the articles and posts they have. Just click on their names at the top of the page. There’s a wealth of information available.
Do they want to keep the house, or are they ready to let it go?
Are they behind in their payements?
Is the only lien on the property the first mortgage?
Who is the first mortgage investor (lender, bank, etc)?
Is it FHA (I did not know the upper limit on FHA loans), VA, etc?
are they living in the house?
They would like to keep it.
Behind by 1 month, about to be 2.
No, they have a first at 200K second at 55K house worth 250K on a cooling market.
It is a conventional loan.
They are currently living there.
They also have early closure fee, so lets throw on a extra 10K for that.
If you are trying to help them keep the house, then ....
How did they fall behind?
Has that problem been remedied?
Can they afford the monthly payments?
They can try to refi at a lower rate. This needs to be done before their credit is destroyed by the foreclosure filing.
They can call the first and second lien holders and try to get a forebearance or work out plan.
If they have decided to let the house go ... or they have no other options ... then I would short sell the second lien holder. This could generate some nice cash for you. You could offer to give them 5k if the short sell is successful. But again, this is not a technique where they get to keep the house.
if you offer to give hem 5,000 on a short sale deal i believe it has to be under the table because I heard most lenders wont do it if the sellers make something on the deal.
no love?
Hmmm....
Short sale?
Forbearance workout agreement with lender?
Maybe take it over sub-to and resell on CFD or LO for 275k?
Just a couple of thoughts.
mcole,
What is CFD?
Thanks,
Mr. Sposy
if it cant be resold... what then
will the bank take a loss, and let someone buy it at less then what is owed?
It costs the bank less to short sale than to foreclose. but sometimes people running the banks are blind to that fact. so you have to paint the picture to the loss mitigation Dept. CFD = contract for deed.
Short sales can be a real hassle, but can pay off well.
Josh
[addsig]
Mr. Sposy,
CFD = Contract For Deed.
If you do a Forum search and Article search you should find some good information on this site about them. But here’s a quick description I pulled…
“In a traditional mortgage finance transaction, title to the property transfers to the buyer on sale. The buyer borrows the money to pay the seller in full, and then gives a mortgage back to the lender. With a contract for deed, however, title stays with the seller. The contract will provide for a purchase price and monthly payments, and provide that if the buyer completes making the specified payments, the owner will then provide the buyer with a deed to the property. Contracts for deed are often used for short-term financing (of a few years or less), and may contain a "balloon payment" clause. The contract is then said to balloon on a specified date at which time the entire outstanding and unpaid balance of the purchase price will be due and payable. The hope is that the buyer will be able to use the contract period to find and qualify for financing.”
-----------------------------------------------------
mojojojo_1,
My first recommendation would be to have them talk to their lender to see if they can work something out. If nothing else, it may buy them some time.
If they wanted to sell it themselves, I might suggest them offering something like “No Qualifying! Only $15,000 down, Only XXX per month (etc.)…” and then they structure a CFD for a year or two.
If you wanted to take it over Sub-To, the loan would stay in their name, but you would need to be ready to bring their payments current and keep them current, and then turn around and offer it for sale the same way as above. But there’s no reason you couldn’t be looking for a buyer now -- before you ever took it over.
Some of the moderators on this site have excellent courses and materials on these types of transactions -- John Locke, John Michael, etc. (Am I allowed to promote you guys?)
When it comes to the bank taking a loss or doing a Short Sale, I’m afraid I’m can’t offer much help. But again, search out moderators like TheShortSalePro and look at the articles and posts they have. Just click on their names at the top of the page. There’s a wealth of information available.
I hope this helps, at least a little.
Do they want to keep the house, or are they ready to let it go?
Are they behind in their payements?
Is the only lien on the property the first mortgage?
Who is the first mortgage investor (lender, bank, etc)?
Is it FHA (I did not know the upper limit on FHA loans), VA, etc?
Are they living in the house?
Brenda
Do they want to keep the house, or are they ready to let it go?
Are they behind in their payements?
Is the only lien on the property the first mortgage?
Who is the first mortgage investor (lender, bank, etc)?
Is it FHA (I did not know the upper limit on FHA loans), VA, etc?
are they living in the house?
They would like to keep it.
Behind by 1 month, about to be 2.
No, they have a first at 200K second at 55K house worth 250K on a cooling market.
It is a conventional loan.
They are currently living there.
They also have early closure fee, so lets throw on a extra 10K for that.
If you are trying to help them keep the house, then ....
How did they fall behind?
Has that problem been remedied?
Can they afford the monthly payments?
They can try to refi at a lower rate. This needs to be done before their credit is destroyed by the foreclosure filing.
They can call the first and second lien holders and try to get a forebearance or work out plan.
If they have decided to let the house go ... or they have no other options ... then I would short sell the second lien holder. This could generate some nice cash for you. You could offer to give them 5k if the short sell is successful. But again, this is not a technique where they get to keep the house.
Brenda
if you offer to give hem 5,000 on a short sale deal i believe it has to be under the table because I heard most lenders wont do it if the sellers make something on the deal.
or am I wrong in thinking this way?