I have been trying to help a Forclosed Property owner who owes apx $130k for the balance of the loan and liens. The comps foe this property are $450-$550k.
The gentleman is an 82 year old man and he lost his job so he fell behind on his payments. When I asked him what he wants to have happen, he said he would like to stay on two property for another 6-12 months, he didn't say he wanted any amount of money.
The auction is next week and I am going to be out of the country for over a week so I'm trying to do everything I can to help before I leave because the auction is scheduled for next week.
I'm planning on offering the guy "cash foe keys" to sustain him for a year. I'm not sure if he's open go this idea though.
Most importantly I want to help the guy and profit in the process by renovating the property and selling within six months.
Has anyone on here done anything like this? If so, any advise, suggestions or life experience is very much appreciated.
The attorney I spoke with said he would charge $3,500 to draft the contract but didn't really give any other advise.
Thanks to everyone for your support, I really appreciate it.
if he's within 5 days of sale, he loses the right to reinstate the loan and instead, has to pay it off so, if you can pay it off, go for it. Reinstating it won't work once your within 5 days, unless the lender chooses to allow it.
Also, it's not "Foreclosed" property until the foreclosure happens.
How much do you think the house is worth as is now? Could you purchase it from him and close before the auction, with profit margin in the deal to be fair to him that he too would have benefited financially and able to move out? Of course you would probably have to actually get movers for him and all the difficult physical stuff. That way it would be a WIN WIN for all!
Sounds like a helluva opportunity. Why not offer to prepay a full year-long or even decade-long lease for him elsewhere and have all of his worldly possessions moved? Easily less than $20k expense to scoop up a bunch of equity.
I guess my point is I would pay a lot and he needs a place to live. There are a lot of ways to solve that problem and have possession of the house.
Any updates? At 82 years old, I would think the owner is more concerned about keeping a roof over his head than he is about his credit being messed up due to a foreclosure. I can only imagine being at that age and having a foreclosure about to hit, very scary. It's very good of you to hop on here and see about your different options on how to help him. I'm always about creating a win win for everyone and wouldn't recommend doing anything without being completely open with him on his options and what you can do to help. How much help you want to give will come down to your comfort level and financial ability.
This is a very short fuse, but it can be done. There are a few ways to do this, but here's how I would handle it, not saying this is the best way, but it could work well like this in this situation:
1) Get a letter of authorization signed from the seller allowing you to talk with the lender on his behalf. Call his lender and ask for the loss mitigation department. Ask them for their fax number so you can send in the Letter (yes, it's sad that most of the lenders request that these be sent in via fax instead of email. Who uses faxes anymore anyway? I use efax.com to get these types of docs to the banks when needed). You can actually usually get one day access to talk with the lender about his account if the borrower (the seller) is one the phone with you and gives them the verbal approval for that day. The banks usually need a written letter of authorization if you're going to talk to them on following days.
2) Ask the lien holder for written payoff and for their wiring instructions to send payoffs. That usually takes them a few days, which is time you don't really have, but it is what it is.
3) Talk with a local title company and have them pull an expedited title search for you. You want to make sure that there are no other outstanding liens on the home before doing the next step. This can usually be done in 24-48 hours and may cost around $150. Cheaper if you have a good relationship with a title company.
3) Once the payoff is in hand, have the seller quit claim deed the property into your name and then wire the payoff funds to the lender. Before the seller does this, you would need to sit down and outline your expectations on exactly what you guys plan to do....on paper. If you're trying to sincerely help the guy out, maybe work out a lease for him with an option to buy the home back from you at a later date. If he can't buy it back by that time, then you would have the right to either continue to rent it to him OR you could sell the home to a new buyer (meaning he would have to move out). The amount of the monthly payments in the mean time, and the price you want to sell it to him at down the road, is where you'll have to decide how helpful you want to be. He's in a tight spot, but I wouldn't ever take advantage of him. There are many ways to make it a win win for everyone. At this low of a payoff amount vs what the home is worth, you should be able to easily positive cash flow enough money each month to make it worth while...assuming he has the ability to pay you rent (something else you want to clarify before doing this is where/how he plans on making the lease payments to you. He hasn't been paying the bank, so you need to find out how he's going to pay you). Keep in mind that to do this option, you need access to enough capital to pay his loan off. You don't have time to do a traditional sale with a traditional bank. It's going to either need to be cash you have available or you need to quickly source some hard money.
4) You now own the home. Proceed with your lease agreement with the old owner.
There's a lot more to this that I'm leaving out to try to keep it as simple as possible and easy to follow. Again, this is not the only way, it's just one way. Another option might be to see about securing the note (among a few other options) and work out payments with him.
I don't know that I would personally get his mortgage current. You could easily lose a good bit of protection and run into other issues if you're not the sole owner of the property ( or the note).
Hope that helps and good luck.
(This is not legal advice, please talk with an attorney before pulling the trigger)