negative equity, mechanics lien , ARM HelP!

Hi, Just found this great sight and am very new at trying to do some investing.
Hope someone can offer me some insight on a (preforclose)deal that I have tried to pull together to save the seller from foreclosure & hopefully make a few $, I don’t see any real way to make it work, but maybe someone more seasoned can offer suggestions or tell me to just walk away?
House was recently appraised at $ 77,000, has some nice updates,( siding, mtal roof, new heating, wiring/ plumbing) but needs maybe $ 10,000 to be in attractive rentable/ salable shape.
It has an unassumable balance with a finance co of $ 63,500 and must stay in seller’s name to avoid prepayment penalty which would put it at $ 67,500. / 30 yr adjustable currently at 9.25%/ a cap of 15.25%.
There is also a mechanic lien of $ 12,000 that the will be “forgiven” if the seller keeps the place in his name for another 3 1/2 years.
He is behind 2 payments, $ 1050., soon to be 3. Also back taxes of around
$4000. All in all i estimate the debt to be around $ 85,000, & upside down to the tune of about $ 20,000 ARV.

Not looking good I know. I had hoped to be able to do a lease option & put tenant buyers in but factoring in the insurance, taxes, utilities, etc… it would be off quite a bit over what anyone would pay for rent in this rather depressed area of PA - about $ 900/ I would not mind a lack of cash flow but could not afford carrying costs if vacant. Any option consideration would have to go to the delinquencies . The lender has indicted they would short it at $ 56,000 because of the wife’s illness, but we know how long that can take and they do not have much time left .
I have pretty much given up the idea of doing anything with this myself, but do feel bad for the owners and am trying to help out in anyway I can. They have bought another property & can’t handle 2 mortgages
Should they find a broker who can short it, or just try to put tenants in on their own? I don’t think it is a good candidate to assign to an investor but not sure.
I will feel bad if i cannot help, but realize the difficulties in this deal, or am I over reacting?? I have tried to look at it from many different angles, but come up with nothing helpful and feel it is far too complicated for a “newbie” to tackle
Any input from some old pros would be very welcome. Thanks in advance & dont be afraid to tell it to me staight !

We are not in business to “help”. We are in business to make money. Why waste time with a “deal” like this when there are REAL DEALS out there?

I’d move on!

Good Luck,


Thanks Mike,( I guess?) perhaps that is the slap I need, but I do believe in trying to keep things human too. While I feel that it is pretty hopeless I needed the input of someone else to see if maybe there was a way for it to work out instead of foreclosure.
Thanks for your promptness too.

Mike is right. Way too much emotion. REI is a numbers game and these don’t add up.

hamp, thanks for your input too, I have been dreading making the call to tell them I cannot help will bite the bullit & do it tonight, as you say, the #s just don’t make sense and liens and huge interest rates just plain scare me
Again, much appreciated.

They have bought another property? Why would you ever want to buy a headache. There are Great deals available and this isn’t even close to being one of them. Wish them well and move on.

Don’t try to “force” a transaction by being a “motivated buyer”. Keep looking for the right deal and theis ain’t it!


Thanks again to all who took the time to share their expertise. The numbers & my gut feeling told me it probably would not work, but wanted to make sure I was on track by checking with others with more experience.
While I am anxious to get my first lease op deal down, I can see now that this wasn’t it and have explained it to the sellers.
I would also like to have some investors lined up in case I do get a good one next time, so am trying to locate some & put together a sort of data base as i continue to educate myself. While I feel bad for the sellers, it has been a learning experience for me that did not cost me a thing except some time.

Charity work is good. It’s good for your heart; it’s good for your soul; it’s good for society. Besides that, it just feels good.

But you must separate your charity work from your business. You can give til it hurts, but you must make the money, first, before you can give it away.

Any time the words “help them out” or “give them a break” cross your mind, even briefly, you have a bad deal and you are working with people you should not be working with (never ever rent to anyone who “needs a break”).

The sellers of that house have made a lifetime of very bad decisions, and they will spend the rest of their lives making very bad decisions. You can not save them from themselves.

They would love to shove their bad decisions off onto you, so that you could bear the consequences and not them.

The only thing that is going to work for you on this house is a short sale, with the lien holder agreeing to settle. There is no way for the sellers to get out of that house without being hurt.

No flipping way in h*ll would I ever assume a loan that bad. That’s the worst loan I’ve heard about since the 70s. Those people must have credit scores below 500 to have such a bad loan.

Yes, sadly what you say is true- so I am off to look for a real deal. what’s the old saying? “3000 Frenchman can’t be wrong?..” or something to that effect.
I told the seller yesterday that it will not work for me and to try to get it shorted, either that or go into foreclosure,no longer my concern.
I am determined to keep up with this & realize thru everyones help here that sometimes the best deals are the ones you walk away from.