URGENT Need Help With A Subject-To
A friend asked my help in resolving a mortgage crisis. We have to make a decision by 12pm on May 1st before his mortgage company files for foreclosure
He is in arrears over 3 months on mortgage and all his bills. The mortgage is not currently in foreclosure but it is in default and the only thing staying foreclosure was the pending sale.
The numbers are as follows: Appraisal - 430,000
Current principal - 289,000
Interest Due - 11,000
Prepayment Penalty - 9,100
Late Fees - 785
Other fees & Escrow - 1,000
Total - $310,885
The HOA is trying to foreclose for back HOA fees and that payoff is $6K.
There are also IRS liens for $16K (which he is appealing) and property taxes in arrears for $12K.
He tried to refinance but was denied in several places. He also tried for an equity loan and was turned down. He is currently not making any money as his company is having financial difficulties (he is in construction here in Florida).
He is behind on his car payment, a personal loan and other small debts.
At first he tried to have a family member with good credit (mid score 720) to buy the house but the interest was 10.25 on a 2yr/6month ARM. The cousin wanted him to escrow at least 10 months of payments to cover the upcoming mortgage, hoa, taxes and insurance). My friends credit is so trashed that he will need a long time to get his score back up. However his cash out of the deal was going to be way less than the escrow the cousin wants and he would still have all the other bills and no way to pay. The cousin said he is not going to do it if there is no escrow.
What I thought of doing was taking the property subject-to and paying off the arrears on the mortgage and the HOA fees. I was then thinking to take out an equity loan and pay the property taxes and maybe the IRS if the appeal is resolved. We found a hard money lender that would lend the $22k needed to bring the loan current and pay the HOA.
My questions are as follows: If I take the property subject-to do I setup a land trust to put the property in with myself as the trustee or do we just add my name to the deed as co-owner? Which option is best? Will we be able to to take out an equity loan using my credit instead of his? If we can, is there a limit as to how much of the equity we can take out? How long after the arrears are paid do we need to wait to take out the equity loan?
Thanks
Thanks for the help. I decided this was a no go because after checking out the area there are lots of similar properties for sale at 2/3 the price of this and they are not selling nor are they renting.
Thanks for the help. I decided this was a no go because after checking out the area there are lots of similar properties for sale at 2/3 the price of this and they are not selling nor are they renting.