Negotiating forbearance or loan mod for foreclosure sellers

11 Replies

Hello,

Just got a lead in for a home that is 6 months behind and in foreclosure.   The seller is motivated.

Would like any tips or successful actions re negotiating with the bank to accept a couple payments and stop the foreclosure, loan mod etc.  My plan would be to get the payout down so that I could take over the property and lease/option it.

Any information would be appreciated.

Best,

Roger 

Updated 9 months ago

I'd like to hear with investors with experience in working with homeowners in foreclosure. I've recently been working in this niche. Thx.

If it's in foreclosure the loan needs to be reinstated completely or they need a loan modification. 

if the statute has not sunset, I'd also pay attention to Florida Consumer Protection Statute 501.1377 - Violations involving homeowners during the course of residential foreclosure proceedings, to ensure you don't subject yourself to a potential $15,000 fine. It may or may not apply to you or your situation but it's worth reading to make sure it doesn't.

Ron S.  Thanks for the heads up.  I did look up that statute.  That is for a "foreclosure consultant", or a person that charges a fee to the homeowner to stop foreclosure.  (b) From the statute: “Foreclosure-rescue consultant” means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. "

So helping with bank payouts etc to buy the property should be fine.  Otherwise no one could invest in foreclosure properties and that is not the intention of the statute. 

Brett-  Totally aware of that fact.  The question is what are the best techniques to get the bank to go along with the loan mod or mortgage forbearance. 

Not likely a viable strategy. Loan mods are very slow and usually don’t occur.

As for negotiating down the amount of arrears to bring the loan current, very few lenders would/could allow this.

If the property is upside down, neither of these would make much sense anyway.

Once the loan goes into default, especially if you could accomplish of your two ideas, the loan is more closely watched and your idea would be more to trigger the due on sale clause.

Wayne,  Thanks for the information  Makes sense.

How then can investment in foreclosures be a profitable activity?  Or are you saying that the only strategy is to negotiate when the owner is merely behind and not in default and that once a notice of default or Lis Pendens is filed?

You have to have the cash to catch up the arrears, or better yet just buy it outright, and obviously there has to be enough equity to buy it at a deal.
The “buy it sub2 then lease option it to an unqualified buyer” strategy is just trouble waiting to happen.

Wayne,  Thanks for your input.

Best,

Roger

Originally posted by @Roger Harrison :

Ron S.  Thanks for the heads up.  I did look up that statute.  That is for a "foreclosure consultant", or a person that charges a fee to the homeowner to stop foreclosure.  (b) From the statute: “Foreclosure-rescue consultant” means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. "

So helping with bank payouts etc to buy the property should be fine.  Otherwise no one could invest in foreclosure properties and that is not the intention of the statute. 

Brett-  Totally aware of that fact.  The question is what are the best techniques to get the bank to go along with the loan mod or mortgage forbearance. 

 as long as you are aware...that's all I'm saying. I see quite a few people here on the other coast claiming they are just helping the borrower with back payments, helping with bank payouts etc. to buy the property (Other valuable consideration?) thinking they were not taking actions that were deemed to be those of a foreclosure consultant, only to be fined and/or prosecuted.

Thanks for the data.

I do know that many investors profitably work with homeowners in foreclosure.

I would love to find out what precautions others take to insure that they don't run afoul of this statute.

What type of real estate investing do you do?

Best,

Roger 

@Roger Harrison are you a wholesaler?  I am reading through this thread, and I am still fuzzy on what it is you are looking to achieve...??

If you are looking to buy the Seller's house, you can initiate the short sale process with the lender.  This can sometimes give you more time to complete the process if the lender knows there is a contract in process.  Many of the banks still use Equator, so you can upload the contract and whatever documents they need, and be able to track the progress there.

I don't know why you would invest your own money to bring a delinquent loan up to current.  That sounds foolish (that sounded harsh...I meant no intention of calling you names, but rather to describe the actions).  Plus, I have no idea what that would do for YOU.  

I have worked with Sellers in foreclosure, both as a Realtor, and as an investor/Buyer.  Unless you have full intention of purchasing the property, and have the financing in place (or cash), there really is no way to option a foreclosure property.  Time is a finite resource for a Seller in foreclosure, and you would be wasting their time with no definitive purchase in sight.  Wholesalers ARE actually considered under the same class as the consultants as it is the same "hope" that the Seller can place in someone to help them, that potentially doesn't come to fruition.

Thanks for the data.

No I wasn't looking to invest my money to bring the loan current.  I was looking for ways to negotiate with the bank on the seller's behalf to get them to waive fees and reinstate the loan.  I would then sub 2 the current loan and get the deed in my name and lease option the property.

That though is just one strategy.   I'm interested in the short sale idea as well.   I'm looking for a win win strategy that helps the homeowner and enables me to profit too.

Are there any webinars, videos, articles etc. on how to initiate the short sale process and how this can be profitable?

Best,

Roger 

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