Very Creative Strategy Needed -- Pre-Foreclosure lead

[Mel F.]

Today I was presented with a homeowner who is $13900 in arrears and is willing to go into Bankruptcy rather than sell his house. He raised his family there and built it with his own hands. I understand his pain but still encourage him to sell and avoid ruining his credit. The house is valued at $89K and he owes $76K. Monthly PITI mortgage is $712. He is now much more financially stable to pay his mortgage but cannot play catch up. He is willing to pay the extra money per month required after bankruptcy (somewhere around an extra $2-300/month).

So, if he absolutely does not want to move, I still want to help. My first thought was to (1) pay his arrears, (2) get the deed subject to and (3) charge an additional monthly rate to pay down his mortgage, pay off the amount of arrears that I would basically loan, and then make a profit after a few years when I'm fully reimbursed for the arrears. Alternatively, I was considering doing number 1 & 2, and a Lease-Option so that he could buy back the house in 5 years, but since the mortgage would still be in his name with the Sub2 portion, he would likely be unable to get another mortgage to buy back the house.

Many are probably reading this thinking, “That’s an impossible situation”. However, we are in the Real Estate Problem Solving Business. This homeowner has a problem, and I want to solve it with a Win-Win solution.

Anyone else worked a similar deal? Any legal issues I should watch out for?