:huh :huh :huh :huhOkay, just beginning to wrap my mind around a ton of info. My peak interest is in sub to ops, with hopefully a buyer to follow rather than a leaser (theoretically). I’ve been picking through info here and there (mostly free), I recently looked into Marko Rubels program in which he states that the “banks” are willing to negotiate the price of the original loan for payoff post a sub to contract. Is there any truth to this? If so what about the negative impact on the original seller’s credit (yeah I know it’s not a forclosure, but settling for less than agreed seems close to it). How difficult is it to negotiate with the banks, will they only neg. on a second mort., but not a first? Is it legal to compensate the orig. seller with funds obtained from this sort of negotiation? Sorry for the bombardment of questions! Surely more to follow. I would just like to know if anyone has successful achieved this. It seems to me to be the only way to profit on an underwater (no equity) preforclosure. Thanks, from SC.
Hi,
If a bank or lender is in 1st position they have absolutely no reason to negotiate anything to change or short their note!
Seconds may consider a negotiation because of circumstances out side of their control to potentially except less than the original note. If the current owners are already missing payments and headed toward a notice of default filing then the property will become a short sale.
Although either a 1st or 2nd deed holder may still reject a compromise offer depending on whether there is principle mortgage insurance and whether they believe they could recover the shortage in court, and whether the state allows deficiency judgments.
GR
I do not agree with Marko’s quote that the banks are willing to negotiate after completing a ‘subject to’ deal. I"ve done nearly 100 subject to deals over the years…the problem is that if you begin to negotiate on the loan, even with specific power of attorney to do so, you will alarm the bank when they learn of the transfer of title and they would most likely invoke the ‘due on sale’ clause in the original mortgage. If the loan was not in default, why would they negotiate anything on a loan that is working well for them?!! Doesn’t make sense. If you default, you have other problems plus you begin to ruin the original borrowers credit causing collateral damage for your deal.
Regarding paying the seller, if you have a consulting agreement or a contract for payments to compensate them for some of their equity, I do not see any violations in law…no injured parties…no violations.
I believe that ‘subject to’ deals are viable in this market as are ‘sandwich lease purchases’ which I’ve done hundreds of over the years. The market is filled with opportunities…examine the market and choose the deals that work in this market. Stay away from activity that might be right for a different market and focus on the current market conditions…otherwise, you will pay dearly for your mistakes.
Personally, most of my activity these days is creating profitable and high yield notes and either keeping them if I do not need any income, or selling them for profit. For example, I own a mobile home park. If I wanted to make wages for a given time frame, I would invest about $3k to buy a mobile home and place it on one of my lots, sell it with no credit required to a family for $500 down and $200/month for 5 years plus lot rent. I would then sell the $200/month X 60 months ($12k) to an investor, most likely in his IRA, at a discount to yield 18% which would mean he would write me a check for $7876.05 and get back $12k over 5 years…a good deal in that it is 18% plus secured by the title. A good deal for me as I earned over $5300 to buy groceries plus lot rent on my dirt under the mobile home. A good deal for the owner occupant to have a home with financing for his family…everyone wins.
You could do this type of deal every month and make more than most RE Investors make on average. Hope this helps.
Rob