I’m just getting into foreclosures and have some basic questions. My apologies in advance if they are stupid.
Are there are any foreclosure specialists in the San Gabriel Valley, CA?
What does REO stand for?
What does ECOR stand for?
Where do I go to buy Authorization to Release Forms? Sales Contracts?
Some short sale experts recommend a drive-by. What if I can’t do this due to property location? How critical is this?
What is a Preliminary HUD-1 settlement statement.
Deficiency judgement’s vs. 1099. How often does this come up in conversations?
I have a question about the example below:
A property is identified and valued at $200,000 in a distress situation. The property has a mortgage of approximately $197,000 and is in need of several thousand dollars of repairs. A short sale entrepreneur contacts the bank and begins the process. His first offer is $50,000. The bank laughs tells him to make a higher offer. After several phone calls, the bank agrees to accept $130,000 as payment in full equaling a $67,000 short sale! With the new payoff of $130,000, he wholesales the property to an investor for $140,000 and makes a smooth $10,000.
For the $130,000 above, how do I pay this? Do I get a loan and start making payments until I sell it?
Hello and welcome,
I’ll tackle the ones I know:
REO-Real estate owned (department that marketsforeclosed, bank owned properties)
ECOR I suspect this is a typo ECOA Equal Credit Opportunity Act or ESCROW-Funds held by a bi-partisan 3rd party in an RE transcation.
Authorization to Release- I can shoot you one, the other good folks can help with the others. Write your own contracts when you can and learn contract law, it’ll serve you well. Unfortunately, most lenders will require that you use the state approved RE contract on a short sale.
HUD-1-Statement of anticipated closing costs.
1099’s/Deficiency Judgements- On a short sale, the lender will issue a 1099 to the homeowner for the amount of the forgiven debt. Someone has to pay taxes on it and the lender isn’t. The forgiven debt is 1099’d as taxable income in the year it was received.
I’ll leave it to the short sale experts to chime in on the other questions. The few I’ve done have been a load of work and I had to submit either proof of funds or a HUD-1 before they’ll entertain the offer. You’ve negotiated a pretty good deal, IMO. It’ll just cause a huge tax hickey to the homeowner. You’ll likely have problems assigning the contract, though. Most folks use and/or assigns which is a red flag to the lender. Most folks don’t realize, that unless specifically prohibited by the contract, all are assignable.
BTW, explore the links to the left and you’ll find a glossary and lots of other neat stuff to help you along. There’s a wealth of info here.