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HELP! Save my property from foreclosure!

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Chris Ukachukwu

Bellwood, Illinois

Feb 11 '11, 01:07 AM


I have a mortgage on a rental property that went into default over 1 year ago. A combination of county and state tax increase made it upside down. $85K is the balance.

It was listed for short sale about 10 months ago. They've rejected 2 offers (I suspect they were too low)

I think the lender is willing to accept a SS offer for about 50% of what is owed. At this point, I'd love to save it from foreclosure but I don't have the cash to purchase it and I don't know anyone who can buy it or lend the money. I'd happily accept a new note on it from an investor.

Is there ANY WAY I can do this and avoid the foreclosure. I'm afraid that time has almost ran out. Any help will be highly appreciated.



Joel Owens Verified Moderator

Commercial Real Estate Broker from Canton, Georgia

Feb 11 '11, 02:01 AM
2 votes


DOUBTFUL.

Most lenders at closing will make you sign that the sale is an "arms length transaction".

You will sign a document under penalty of perjury saying you don't have any agreement formal,informal,or otherwise that is part of closing outside of closing,written or verbal where you could benefit from an arrangement.

They can actually criminally prosecute you for fraud.If the documents are not asked for at closing these banks have come back months after closing and asked for them.

Used to you could try these types of things years ago but banks have gotten smart to it.

Can you rent the property out??

If so why not try for a loan mod on the property to reduce the interest rate and put back payment into the balance??

If the bank has a BPO they will not deviate from it unless they order another to relook at the value.

I don't know your whole story but it sounds like you are finished on this one.

no legal advice



Medium_allworldrealtyJoel Owens, All World Realty
E-Mail: [email protected]
Telephone: 678-779-2798
Website: http://www.AWcommercial.com
www.AWcommercial.com 678-779-2798 [email protected]


Joel Owens Verified Moderator

Commercial Real Estate Broker from Canton, Georgia

Feb 11 '11, 02:06 AM
2 votes


If you have a bunch of other assets and won't qualify for a loan mod then make sure your personal name isn't on other properties you have equity on or future appreciation where they can lien to collect their money in the future.

Make sure you know deficiency laws in your state to plan for options.A litigation real estate attorney will know strategies.

You want to protect your other assets so they can't be touched and position yourself (within the law) of the best possible outcome.



Medium_allworldrealtyJoel Owens, All World Realty
E-Mail: [email protected]
Telephone: 678-779-2798
Website: http://www.AWcommercial.com
www.AWcommercial.com 678-779-2798 [email protected]


Chris Ukachukwu

Bellwood, Illinois

Feb 11 '11, 04:13 AM
1 vote


Thanks Joel, for your response. Let me clarify that it is more important to me that the property escapes foreclosure. So really, if any investor wants to go for it, they are welcome to it.



Michael Allan

Real Estate Investor from Tampa, Florida

Feb 11 '11, 04:19 AM


Hi Chris. Do you know what an estimated market value is on the home? What the offer amounts were that got declined, as well as the amount that you owe on the property? Also, do you only have a first mortgage or multiple liens?



Chris Ukachukwu

Bellwood, Illinois

Feb 11 '11, 01:51 PM


Hi Michael,
The initial BPO was at $55K or thereabouts. When the 2nd offer came in 4 months later, another BPO was ordered but I don't know what that was. I suspect the current market value is around mid $50s. The first offer was $34K within a month of listing. The second was about $39K. The mortage balance in default was $83K. There's no other mortgage on it.

PS:
By the way, the tenants are still there but reluctantly looking to move ASAP. Wish I could keep them. They've been there for over 12 years. I had initially petitioned the lender for a loan restructure or payment adjustment since I was taking in less than the mortgage (after the tax hikes).



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Feb 11 '11, 10:42 PM


Any chance someone's going to offer something closer to the BPO?

What's you're personal situation? What I've seen is that if banks think they can extract money from the borrower with a deficiency judgment, especially on investment properties, they would rather go to foreclosure than accept a short sale. I had one property I had under contract at $67K end up selling at auction at $61K, with a couple of tax bills attached. To sell to me, the bank would have had to clear up the tax bills and (probably) agree not to pursue a deficiency. By going to auction, they filed a large deficiency judgment and the auction winner was stuck with the tax bills.

You're not going to be able to legitimately keep the property. The lender will insist on this.

Any chance the current tenants could qualify for a loan? They have the biggest vested interest in the property. FHA loans require only 3.5% down, though their inspections are pretty stringent. Some areas have down payment assistance programs that will provide that 3.5%, and sellers (or lenders, in a case like this) can provide assistance for closing costs. So, its possible they could buy the property will little out of pocket.



Jon Holdman, Flying Phoenix LLC


Chris Ukachukwu

Bellwood, Illinois

Feb 11 '11, 11:00 PM


Thanks for your input Jon. I'm afraid of any future encumbrance resulting from this (likely from a default judgment). That's why I'd rather find a SS buyer (especially if it will keep my tenants in the property). They love it and don't want to move. They are section 8 and don't qualify for the loan. They'd love to buy it.



Joel Owens Verified Moderator

Commercial Real Estate Broker from Canton, Georgia

Feb 11 '11, 11:18 PM


Sounds like they have 2 bad bpo's that are overinflated for the market.

The 2 offers before they were never even countered but just rejected??

If that's the case it sounds like they aren't interested in selling it.

There are many interests at play when the loan defaults.The investors,the lender,the servicer of the loan,the insurance company (if there is one) etc.

At this point your credit is trashed anyways so a foreclosure won't do much.The possible judgment is what you worry about.You need to look at judgment laws for your state and options.

From what you are saying nobody is going to pay a price the bank is willing to accept.If this is the case you are done.

I have had 11 offers before on a short sale at 95k to 108k.They rejected all and foreclosed and 3 months later sold for 72k.

Makes no sense but whatever.Sometimes you just can't control it.Keep trying up until the sale to find a solution.All you can do is try.



Medium_allworldrealtyJoel Owens, All World Realty
E-Mail: [email protected]
Telephone: 678-779-2798
Website: http://www.AWcommercial.com
www.AWcommercial.com 678-779-2798 [email protected]


Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Feb 11 '11, 11:23 PM


If the current rent doesn't cover your current PITI payment ("since I was taking in less than the mortgage (after the tax hikes)"), then this looks like a crummy rental to me, even if someone buys it at a steep discount. Rent needs to be double P&I (calculated assuming 0% down) for a rental to be profitable.

Plus buy wanting an investor to buy it and leave your tenants in place, you've seriously reduced your pool of buyers, and that pool of buyers is in a strong position to take down only the very best deals. You'll have a much larger pool of buyers if you include people who would move into the house.

If the bank thinks they can come after you for a deficiency, a short sale is unlikely, IMHO. The bank wasn't as much cash as they can get. If they're dealing with a broke, out of work homeowner, taking the short makes sense. If the borrower has assets and income, going after the deficiency makes sense.

If you really do have assets, and really do want to avoid a foreclosure, can you just sell it in the normal manner? That is, sell for whatever price it will bring and bring cash to the closing table?



Jon Holdman, Flying Phoenix LLC


Chris Ukachukwu

Bellwood, Illinois

Feb 11 '11, 11:54 PM


Originally posted by Joel Owens:
Sounds like they have 2 bad bpo's that are overinflated for the market.

The 2 offers before they were never even countered but just rejected??

If that's the case it sounds like they aren't interested in selling it.

There are many interests at play when the loan defaults.The investors,the lender,the servicer of the loan,the insurance company (if there is one) etc.

At this point your credit is trashed anyways so a foreclosure won't do much.The possible judgment is what you worry about.You need to look at judgment laws for your state and options.

From what you are saying nobody is going to pay a price the bank is willing to accept.If this is the case you are done.

I have had 11 offers before on a short sale at 95k to 108k.They rejected all and foreclosed and 3 months later sold for 72k.

Makes no sense but whatever.Sometimes you just can't control it.Keep trying up until the sale to find a solution.All you can do is try.

Hi Joel,
When they rejected the first offer, they countered at $45K. The buyer increased his offer by $1000 and they countered basically at the same 45K. This is how I came away with the impression that they are looking for mid $40s.

I don't remember what they did in the second case.

Thanks for your input.



Chris Ukachukwu

Bellwood, Illinois

Feb 12 '11, 12:02 AM


Originally posted by Jon Holdman:
If the current rent doesn't cover your current PITI payment ("since I was taking in less than the mortgage (after the tax hikes)"), then this looks like a crummy rental to me, even if someone buys it at a steep discount. Rent needs to be double P&I (calculated assuming 0% down) for a rental to be profitable.

Plus buy wanting an investor to buy it and leave your tenants in place, you've seriously reduced your pool of buyers, and that pool of buyers is in a strong position to take down only the very best deals. You'll have a much larger pool of buyers if you include people who would move into the house.

Thanks Jon.
You bring up a good point for clarification: I don't care at this point who buys it. I would've preferred someone who would leave the tenants in the property but it is NOT a condition.

The other addition is that one of the tax hikes have been revised and also my mortgage bal. was at $83K but this may be bought at about 1/2 of that: mid $40s.



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