Complicated complicated short pay off

4 Replies

OK so im gonna lay out the facts:

Found a woman who wants me to take her property in a short pay off. Not short sale. My understanding is that the noteholder agrees to a settlement amount and the deed is hers free and clear.

Back in 2007 an individual transferred a deed on a property with an outstanding mortgage of $535k in Brooklyn NY.

in 2008 The seller passed away. since 2007 not a single payment has been made to the mortgage. The woman who had the deed transferred in her name is only the court appointed administrator of the estate, from my current research she should be able to transfer deed but i will run a title search.

She has been sending her lawyer to the courts avoiding being foreclosed on because the original note was not recorded correctly and they cannot produce it. 

On a separate note since then there have been nearly $300k in Environment Control Board violations. 

I don't know how a loan for 535k was originally pulled because the property is currently worth 380k. tops.

Because the loan has gone unpaid for so long there is a an additional debt collector who we must go through. Company at SLS.net. I have begun negotiations with them.

I want the loan settled at 80k here are my arguments:

1. original note is missing! will be very hard to foreclose.

2. 300k in ECB violations ( i have already negotiated with citya  one time pay of 75k, but that is my specialty they might not know they can do that or willing to)

3. engineer report showing issues with the home and approximately 50k in necessary renovations to meet conditions to reverse violations. Approximately another 10k in Expediting fees to get the job done.

4. Comps showing the value fo the home under 400k.

I have another issue with how she will transfer the property to me. But i will let you all digest what i just wrote first. Please help! this is my first potential deal. 

Oh another thing. She is showing around 125k income a year. I know that will effect us negatively...but still would like to hear opinions since she has not paid mortgage since 07 and they have not been able to foreclose on her.

Not going to happen. The "lost note", in most places, is no obstacle.  A simple affidavit cures the issue.  SLS is a large, well experienced, distressed loan Servicer.  They'll be looking for an open market short sale, not a short pay.  They also know, like we do, that most huge code violation fines get negotiated out.

Originally posted by @Wayne Brooks :

Not going to happen. The "lost note", in most places, is no obstacle.  A simple affidavit cures the issue.  SLS is a large, well experienced, distressed loan Servicer.  They'll be looking for an open market short sale, not a short pay.  They also know, like we do, that most huge code violation fines get negotiated out.

Right there with Wayne. As a former SLS associate, I can tell you that they know what you know and then some. A lost note affidavit at the most costs 1% of the UPB. Problem solved, your bargaining chip gone.

Yes but there are reasons their not foreclosing. The lien was for $535,000. You don't say what their purchase price was. Or how much down they put.  But you do say the current value is around $380,000. 

The environmental violations may be something their not wanting to pay for. Could they negotiate yes but most of the time the big banks don't exert more money than necessary. I've seen them steal homes with not producing the note! I've even proven they don't know who owns the note in my own case. They accordingly were dismissed w/o prejudice. Beyond this I was accused of wanting a "Free Home." 

At any rate if they sell their notes I'd propose a note purchase. Your gaining a  bit of ground with the discount on the ECB violations but to come to a purchase price offer of $80,000 minus extreme repairs being necessary will get you laughed out of every bank for the most part. I don't care how many people I hear say I buy notes for 10% of unpaid principal balance. 

If they will sell the note and she will quit claim deed her interests it's all a numbers game. But definitely look into other liens on the property as well.  I would also suggest an extenuating circumstances letter. She may make decent money but that money disappears the more you have to pay attorneys. They may not sell the note regardless of what they can show as ownership paperwork and go after the estate that she's the administrator of to seek fees. If they can do such a thing. Which wouldn't surprise me.  Especially, if they can show she has neglected her role in maintaining the property IE: ECB violations.