I’m trying to flip a foreclosure without actually flipping it…by stepping out of the transaction, and allowing the lender to sell directly to my endbuyer and paying me a “asignment fee”, or “facilitation fee”. Is this legal and or possible. My endbuyer is approved for an FHA loan, I’ve called every local bank, credit union and over 40 lenders on my approved list, none will touch it, the 90 day seasoning will kill it. In addition, the endbuyers credit is mid 600’s and his approval allows him to buy with only 3% down a property up to 54% bottom debt ratio manually written, he can get a lot bigger house with FHA and with less down. So, after watching Bill Bronchick, I thought I’d do it this way:
Make offer to lender to buy.
Once accepted from Lender, offer to sell to endbuyer.
Once endbuyer accepts, transfer endbuyers contracted "higher"offer to lender and have lender pay me “assignment” fee in one closing.
I’ve tlkd to 3 lawyers, all saying, a contract is asignable unless a provision states it isn’t. But the question arises about me not being a real estate agent. Per John Alexander’s course and teachings, the rights of “equitable conversion” allows the potential buyer of any property certain “beneficial rights” and “equitable ownership”, like the right to buy or sell the property…of course, I can’t sell a house I don’t own, so to circumvent the actual buying and putting title in my name, he suggests to simple step out of the transaction and assign my endbuyers contract to the lender and have the lender pay me the difference.
Question: Is this legal, lawyers seem to be wishy washy about it.
How do I initiate the transfer of my endbuyer to lender in the most amiable fashion?
I want to make sure the lender actially pays me, I’ve heard of them stiffing people on short sales, like negotiaters for the investor, and I’d like them to simply sign an invoice or contract against the house, but I can’t get a trust deed in 2nd position because I’ve never owned the house, so I don’t want to give them the actual name until I get something signed that secures my spread…so to speak
Any input, reccomendations, opinions, good or bad, would be greatly, greatly appreciated. Chrisjohn123@charter.net
CJ
I would not approach a short sale lender with an offer higher than yours, they WILL cut you out of the deal. Now, a contract IS assignable, if it does not state it isn’t in the contract. Most lenders will state in their approval letter a) who the buyer is, or b) that it is not assignable, or c) both.
Are you in a rural area at all? A USDA “Rural Development” loan could be your answer. No seasoning, no down payments, closing costs can be rolled in, etc. Credit score was from 580 but for 100% sure a 620 score will get it done.
I haven’t quite figured out my work around for FHA buyers. I will post when/if I get it done.
Actually I have never done this type of transaction but I have always been under the impression that the person you are assigning the contract to is the one that pays you not the seller.
Ok, actually I’m doing a reverse assignment, so, I’m actually assigning the contract to buy that I received from my end buyer to the lender. But before I do this, to insure I get paid, I want the lender to sign an “assignment fee” invoice or contract to insure I get paid. Then I give the pre-approved buyer over and assign the end buyer contract…but still…people ask, why would a lender do this…well…so they could sell the house, and get a toxic asset off there books…now why not sell to me, one might ask, well, because i have an out with the inspection if needed and I could give them one of many reasons that come up in any inspection of virtually any REO…in the end, I still don’t know the best way to “present” this to the lender…if one way is better than another, and even the odds of the lender accepting something like this???
I read some where on this forum that FHA won’t accept any assignment fee above 3K or maybe not at all. You’ll need another method. The post was from me and Jeff Corpuz and was fairly recent. Herbster
How did flipping the foreclosure turn out!!! I just came across the same scenrio. I have a buyer who wants to purchase a REO. I would like to be a middle man in this.
