Need advice coordinating a complicated deal.

8 Replies

This deal is out of my comfort zone. Because It has great potential I am willing to attempt it if I get a solid strategy in place. I live in Ohio. I do plan to consult my attorney tomorrow but would like input / guidance from other investors as well.

So heres the deal:

A woman living across the street from one of my properties in a single family home passed away about 1-2 years ago. The children moved in and trashed the place and moved out. I posted a letter on the door expressing my interest in the home. I got a call from the sister of the deceased homeowner who is handling the estate. She informed me that the home is still in her deceased sisters name. She has not placed the home in probate.

according only to the conversation I had with this sister there is a $67,000 loan of some sort on the house. She has been receiving mail from two companies she believe to be collection agencies. She provided me with account numbers and names of the companies.

I believe this house is currently worth 20,000 and has an ARV of 60,000

I am willing to pre sue this deal because the sister simply wants it gone. ANY advice on how to structure this deal would be very helpful.

Thank you in advance!

Hi Jered,

I'm a little confused on this "deal". Let me see if I understand this situation correctly.

1. The house currently has a loan of $67,000 +/- on it.

2. It's currently worth $20,000

3. The ARV is $60,000

So you're trying to buy a house with negative equity, then you'll have to put money into it to get it to an ARV of $60,000. How are you planning on making money on the deal?

Eric

The only way forward appears to be to get the lien holders to negotiate a much smaller payoff. Collections will probably not talk to you unless the owner provides written permission.

If the house had an ARV of $160K, you may have something. I think you'll be pushing rope a long time on this one.

Thank you for the input, and fast reply @Mike M. and @Eric Black. Your inputs keep me thinking and moving forward.

To answer your question Eric, Yes I am trying to buy a house that currently has negative equity. I am now leaning toward attempting to purchase the note. From my current understanding this note was sold from Wells Fargo to a much smaller company about 1-2 years ago. Since that time no payments have been made on the note. So my question to the bigger pockets community is when purchasing an individual non performing note of $67,000 can you get them for 20-30cents on the dollar? I have no idea what market is for this type of purchase.

@Mike M - "Collections will probably not talk to you unless the owner provides written permission." I thought this may an issue due to the fact that the woman is deceased. I was going to just hope this small company would talk to me in hopes to get rid of this non performing note. Do you have any suggestions on a way around this??

If I was able to pull off purchasing the note I would then forclose on the deceased owner. Has anyone had to foreclose on a deceased home owner?? Does this differ from standard foreclosure?

If it doesn't pan out I will drop it and move on to the next one. Until then I am going to attempt to exhaust all options.

Thanks all!

Account Closed There's a "formal" document folks can sign to give others permission to access things like account data and other personal info but I'll be darned if I know the name of it (remember reading about it in a preforclosure book).

I don't know if it really matters what the going rate for NPNs are. If you can get as far as to figure out what you're willing to pay for the house, you can determine your own $/$ ratio.

You're well outside of anything I have any useful knowledge on. Best wishes going forward and hope you can make this happen.

Originally posted by Account Closed:
1. From my current understanding this note was sold from Wells Fargo to a much smaller company about 1-2 years ago. Since that time no payments have been made on the note. So my question to the bigger pockets community is when purchasing an individual non performing note of $67,000 can you get them for 20-30cents on the dollar?

2. I was going to just hope this small company would talk to me in hopes to get rid of this non performing note. Do you have any suggestions on a way around this??

3. If I was able to pull off purchasing the note I would then forclose on the deceased owner. Has anyone had to foreclose on a deceased home owner??

4. Does this differ from standard foreclosure?

1. Can you yes, provided the Seller wishes to sell. Which includes accepting your price. Non preforming loans will be valued based on the value of the underlying real property. Currently it seems you believe the value to be $20k. The Mortgagee may not think that or they may agree.

2. There is no way to know unless you ask. Curious to know why or how you know to refer to the Mortgagee as a "small company". Typically we would expect to see some legal action by now if owned by a "small company" since they usually do not have spare capital to let sit around. It doesn't sound like the Mortgagee has filed any type of foreclosure with the account 24 months past due.

3. Yes. Foreclosing on the deceased happens often. Each state has rules that pertain to probate how the deceased estate is handled including mortgage foreclosure.

4. I would not use the world "change" to describe the idea, the act of foreclosing per the state is still the same, however per each state rules, some may require additional steps or actions and my be subject to probate.

In some states there are extended time lines and additional costs to dealing with a deceased borrower. Some states on the other hand are not all that complicated.

Originally posted by @Mike M. :
Account Closed There's a "formal" document folks can sign to give others permission to access things like account data and other personal info but I'll be darned if I know the name of it (remember reading about it in a preforclosure book).

...

That's called an Authorization to Release Information.

Jared - you do know how to pick 'em!

Imagine, if you will, a big concrete block wall with a house painted on it. On that house are windows, a garage, and a front door. On that front door is painted a door knocker and even a house address and a sign that reads, "Come on In!"

Now imagine yourself knocking in that door...hard. No, knock harder!

Notice anything? Your hand hurt? I'm not surprised. Lucky you didn't use your head.

Sorry to say this at your expense, but just wanted to give it the light touch.

Yeah, your plan is possible, but not likely. I'd either go at it differently. Either get the relative appointed PR and attempt a short sale or find an opportunity that makes sense.

Do you know if the taxes are current? You will need to take that into consideration as well. I agree with the others that there is not likely to be a deal hear but if you can find the current note holder they might be willing to sell for 20-30% but don't hold your breath.

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