I am a nebwie , but if any body have the knowledge and time to describe exactly this process will be a lot of help.
My main concern is this once they sign you a warranty deed and you can tell them it may take 2 or 3 months before its out of their credit and pay off , whats next step ? do you record the deed at the courthouse ? or cure the loan and tell the mortgage company what you are doin or best not to tell them ?
Once you pass that stage what happens when property is sold ?
you pay off the balance and title company gives you a check for the difference ? or how exactly do you work this out ?
I AM IN SAN ANTONIO , TX JUST IN CASE ANY WEIRD LAW HAVE TO BE APPLY TO THIS .
Since you say “cure the loan”, I will assume they are far enough in arrears that the bank has initiated the foreclosure process. If this is the case, you need to get the owner to call the bank to obtain a current “payoff” statement. Depending where they are in that process, you may not have much time to get things done,(probably less than 45 days to auction), so move fast. Most banks will tell you 3-5 days to obtain this, count on 5-8 before you have it in hand.
Now, this is where you lose me a little bit. The 2-3 months to clear them doesn’t make sense to me. I can simply tell you what we do. Let’s use some fictional numbers as I don’t have yours. Say a market value of 100k and the owner has some equity built up over the years and owes 50k on the original loan amount plus arrears, legal fees and penalties. Once you have the bank letter defining these amounts, the remaining is theoretically owner equity. For examples sake, let’s say arrears totaled 63k implying 37k equity. You simply negotiate to pay off the arrears and give the owner some cash to get out, in this example we would offer maybe 10k. Our total in is 73k on 100k property. The current owner signs the contract and doesn’t get ANY money until he calls me to do the final inspection prior to their leaving the property in broom swept and clean condition. He then gets his 10k to go start again somewhere else upon signing the Warrenty Deed at closing. The biggest wine you will get from them is that “they have all that equity still on the table”. The fact is, I don’t know of any investor who is going to reward them for not paying their mortgage. The other fact is that they have been living in the property, and most of these people just take from it, very few have put anything back into the house. They have simply consumed the majority of their equity through daily living wear & tear. In that sense, they have their equity. As far as telling the bank anything, if you are assuming a note, I would not tell them anything and if you are paying off the arrears, it’s none of their business, they only need give you the Release of Lien. At this point it is a typical closing where all documents are indeed filed at the Recorders office to tell the world who owns what.
Now the major differance may be that we are cash investors while you may be thinking of some sort of financed purchase, I don’t know.
I hope this helped rather than confused. If you like, you can comm me to chat some more about NOT talking to a bank loan you intend to assume.