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Author Topic: loaning money to people in foreclosure  (Read 8963 times)

Offline cja1026

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Re:loaning money to people in foreclosure
« Reply #15 on: December 21, 2005, 02:21:25 pm »
The only way one should ever consider doing it, is when the loan is a new first /TD and the equity available to lend against is below 70% and the  new loan is in the borrowers best interest, Therefore not predatory.

Ex: $300K Fmv/ Mortgage debt + fees =$120k fund $165k
       which includes the caveat that some of the cash-out after closing costs and fees then money would be retained in a secured automatic checking account (lock-box) designated towards at least 6months piti this can be set up at almost any financial institution.therefore the borrowers best interest has been acheived and respected
and not preditory.

"And" if the money is there in some states you may be able to earn upto and limited to 5%.

Offline DHLC

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    • DHLC, Inc
Re:loaning money to people in foreclosure
« Reply #16 on: December 22, 2005, 09:10:52 pm »
A few observations

1.)  Anything above 18% - 21% is USARY

2.) APRs more than 12.7% (at this time) are Sec 32 loans

3.) You must be licensed to lend on Owner occupied homes in most states

4.) RESPA and other Govt. acronyms

5.) Predadory lending (loan sharking) is illegal

6.) No way for you to get in front of 1st lien (The current mortgage)

Put this idea back in the oven...or better yet the dumpster

DHLC Investments, Inc., Direct Hard Money Lender
Serving D/FW, Austin & San Antonio Texas
972-467-6547
972-759-9790 fax
http://www.dhlc.com

Offline cja1026

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Re:loaning money to people in foreclosure
« Reply #17 on: December 23, 2005, 03:34:52 pm »
I have no Idea where you got the usury issue.
I have no Idea why you wouldn't stop to think "is" this person in the slightest way experienced enough to know that his loan has to be the superior lien , and he would pay-off any threatening outstanding debt.
and finally we are licenced . and I admit that I didn't    speak to the 25%rate because that's just ridiculous no one should even think of that unless, they are with IBM.

Offline whatsagirltodo

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Re:loaning money to people in foreclosure
« Reply #18 on: December 27, 2005, 11:36:49 am »
I can't see were this is any different then a HML. Another note, Credit card companies charge 25% sometimes more on cash loans all the time and they do it over long periods of time. Yours seems to be short term.

My advice is ask a lawyer in your state.

Offline cja1026

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Re:loaning money to people in foreclosure
« Reply #19 on: December 27, 2005, 12:26:31 pm »
When our group does these loans we consolidate all debts, and never charge 25% and we usually have  permanent financing at a non-conforming rate or plans to broker it out for permanent financing in the package.

We must remember that these people did not pay their original obligation and there is not many people whom would even consider loaning to these home owners , the residential o/o HML's are shrinking and will only take these people on if:
A.) there is enough profit in it to realize that its worth the risk.
B.) short term with a guaranteed work-out plan.
or at worst
B.) they dont mind owning the property
 

Offline krish1

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Re:loaning money to people in foreclosure
« Reply #20 on: December 31, 2005, 07:53:36 am »
This is a very valid proposition.
I ran this by my attorney weeks ago and here is what
i have concluded.
a) If you lend money, you need to be licensed by the
 banking commission and will have to follow rules.
 Not an easy one.
b) You cannot even place ads in the newspaper with
 such verbage that you will lend money.
c) If you add a keyword called "penalty" etc for the
 homeowner to redeem, the judge will not like it, should
 it go to trial.
d) The best way to work around this is to structure it as
 follows.
 Offer the homeowner to sign an options contract for
 the amount he owes the bank. In the options contract,
 you can state that no new liens can be placed, or you
 exercise.
 If they want to cancel the options contract, they pay
 you a fees of $X + the face value of the option.
 The $X + x can be a voluntary lien against the house that
 you register.
 This will work around the banking commission requirement.
 Also add a clause that if there is another default, you will
 exercise the option.
 Request for a notice on any activity on the property with
 the county registrars office.

 Again, i aint' an attorney. So check with your attorney
 before you make the move.

 Good luck
 -Krish

Offline cja1026

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Re:loaning money to people in foreclosure
« Reply #21 on: January 02, 2006, 10:33:58 am »
Food for thought?

I must admit In New york there are quite a few private lenders that do become whole in court if in fact a default occurs, oh yes borrowers have tried to litigate their way out of paying their obligations to these Individuals but it rarely is successful.

Remember these people hire very expensive attorney's to protect themselves from beginning to end on these deals, trust me on this I've worked very closely with them.

 




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