Purchase Home Affordable Modification agreement

7 Replies

I need help structuring terms to buying (if possible) a residential home that has  a HAMP loan.

The loan was started in 2012 and has a balloon note due 2035.  Owner has made payments on time but is in late 80's and want to sell.  

Owner wants cash.  I don't know if it's possible because of the balloon note, and I having difficulty comping present value of loan.

Owner is waiting for my offer 

I'm very confused.  Are you buying a property or are you trying to buy a note (i.e., a loan.)  If you're buying a property the existing loans are generally not relevant, unless you're buying subject to (i.e., taking over payments on that loan) or there are terms in the loan that limit the seller's ability to sell.

What are you trying to do?

I assume you're trying a sub2?  The dates and number of years seem off, for a loan mod.  Most loan mods take a certain portion of the balance, usually about a third, and "put it on the side", using the remaining balance to compute the new payment....usually a t a 2% rate, 40 year amortization.  Thei "portion they put on the side" doesn't go away, it's due at the end of the term.  I assume this is the "balloon" you're referring to.  I assume a lender would be more likely to invoke the due on sale clause on a modified loans.  They modified it due to hardship on the borrower, not so a subsequent buyer could profit from it.

Thanks for the reply.  I'm a wholesaler and the owner responded to my direct mail campaign.  He is asking for a cash sale.  I plan on wholesaling the property.  The agreement does have a balloon due 2035 .  The balloon disclosure states" even if you make all payments full and on time,the loan will not be paid in full on  11/1/2035.  

I did not see anything about "due on sale clause" or acceleration .    

You don't see the due on sale clause, because you're reading the modification, not the underlying mortgage.  Trust me, it's there.  So, what is the Total current balance pay off amount?  That will come from the lender.  Are you trying to buy for more than that, or less?  I'm guessing the property is still underwater which means you'd have to do a sub2, which could be called, putting the current owner in a much worse position.  If so, I suggest you walk away.

Wayne that's what I needed to know.  He is asking cash but as a wholesaler I want to buy it low.  The balloon is $33, which @ 1/3 or the origiinal loan (I think) so unless I try a sub2 it's not worth it.  Owner wants cash so I looking to see if the margin still looks good enough and if paying cash will wipe out that 2035 balloon note.

@Wayne Brooks this is more a question around mods - I saw your reply about 2/3,2%,40yr - any insight you could give for BOA mods? I know theyre a renowned pain in the *** but I don't have a lot of moves right now other than that and short sale.

Account Closed All the big banks have pretty much the same process. It's not a lot of fun, but not that difficult if you just provide the paper work, and more importantly.....don't let yourself get frustrated when they keep asking for additional paper work, or the same stuff again, just the nature of the beast.

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