Was just contacted by a couple in foreclosure. From phone conversation, details are:
Home value: $125,000 (apraisal 2 yrs ago) Comps now approx 140,000.
Mort Bal: 106,000 Intrest rate 6% FHA Loan via Citibank
Laon 4 mos behind Pmt $975/mo…includes everything.
no secondary liens
Gent being forclosed on is unemployed since March. Not sure of foreclosure date but forclosure filed 7/24. Has tried to work it out with bank…partial paments ect…but they went to foreclosure anyway.
Haven’t seen the house yet, but assuming its OK as is…what kind of approach would you seasoned investors take here? What are the potential pitfalls? I have my ideas, but would like to hear others thoughts.
Thanks for the time.
Hello,
If the house is in good condition meaning that no repairs are needed and the property is free and clear of any liens and what not… I would make the loan current and tell the bank that you are taking over the payments. Give the sellers money to move and decide how you want to split the equity. According to my calculations there is approx 30k in equity minus taxes, closing, and other costs. Offer the sellers 30% of the equity at first then bump up to 35% if they want a little more but do not exceed 50%
Hope that helps and good luck to you!!
Charles,
Did i miss something in your post? You advised REI to tell the bank you are taking over payments…Would the bank be OK with this? would they look the other way of this violation?
Greg, are you talking about the DOSC? If so banks are aware that they could take a loss vs. you taking over the loan and making everything current. Most lenders will let you take over payments. Plus you would be asking them if they would let you take over in the first place.
Charles, thanks for the reply. Buying the equity is only obvious thing to me. Just have to make sure the house is ok. There is a DOSC clause in the mortgage. But since its FHA, I think they will let me assume. We’ll see what happens.
Charles,
Thanks for the reply. I was under the impression, that while the lenders best interest of course is to continue receiving timely payments–they would go on with the DOSC when it is right in their face.
I think I would feel more comfortable with keeping the lender in the dark. What is your experience with this?
Gregg
Gregg