$80k under water, can I do anything for her?

Question

Hey BPers. Got a call from a woman regarding my bandit sign. She's behind about 18 months in payments, no lis pindens yet. She's about $80k under water. I'm basically a wholesaler and do some LOs. Is there anything I could do for her.? I'm assuming no but want to be sure I'm not thinking of something.  Thanks again!

Dave McEvoy · Answer

She's under no illusions. She left the house a while ago anyway and was going to let the bank foreclose, she happened to see my sign and gave it a shot. I'll let her know a shirt sale is her only option and perhaps I can help her down the road. Thanks for the help everyone!

Johnny Kang · Answer

@Dave McEvoy

The only thing you can do is a short sale. Hopefully she realizes this, but if she has some notion that she's going to somehow keep the house when she's 18 months behind, then just move on to other deals for now, and follow up in a few months. So this is the 1st thing you need to find out; whether she's open to doing a short sale. (Make sure she doesn't do a deed-in-lieu, because some banks send out letters to homeowners who are in default, and if she does a deed-in-lieu, you've just lost a possible short sale.) If she is open to doing a short sale, keep in touch with her consistently and build rapport. Find out what the ARV is, what condition her property is in now, cost to renovate, what she owes, who the bank is.

Most banks won't allow "and/or" assigns in their purchase agreement, so you'd have to partner up with an investor and get a finder's fee, but tell them you'd like to learn the process. Some people sell the LLC, but most buyers, unless you've already done several deals with them don't like to do that. If you've been wholesaling, you should have some investors you can bring this deal to. Deed restriction period and the rules on not being able to profit X amount applies only to the buyer, which won't be you.

Hope that helped.

Dave McEvoy · Answer

She already said she hasn't received a notice yet. She also said that her bank thought she applied for a loan modification a while back but she actually didn't. I know there's def better deals but hate to turn away motivated sellers, if all I need is another exit strategy to add to my tool box

Ray Johnson · Answer

I would recommend looking for a better deal, Upstate NY is tough for this scenario. I would also find out if she's in foreclosure proceedings after 18 months of not paying the mortgage that will help with your answer

Dave McEvoy · Answer

She is upstate about 90 miles north of NYC. if there was a way to wholesale it legally without having to actually "pay" for it that would be ideal. I don't want to buy it and hold for a certain amount of time. I'm reading now that some people buy in land trusts to do it, or buy with an LLC and then sell the LLC to the end buyer.

Brent Coombs · Answer

@Dave McEvoy, from day one, you MUST have your end-Buyer's point of view in mind!

ie. If YOU don't want to wait around for months/years for her Lender to decide whether your low-ball Offer is acceptable - why on earth would your end-Buyer? Short answer to your heading: no!...

Ray Johnson · Answer

She hasn't paid the mortgage in 18 months? Is she already in foreclosure proceedings? At 80k underwater no one is going to buy the property at a loss unless there's an aggressive outside of the box strategy, What area of NY are we talking about? Any of the 5 Boroughs where there's an option for various strategies or Upstate NY where a short sale is her only option

Dan Mann · Answer

@Dave McEvoy

I'm out of my depth here, but my impression is Brett would recommend she simply sales you the house as a traditional sale.  This would require you to purchase the house for at least the amount of the loan and when you do this it cover the amount she is behind.

A short sale would be buying it for less than what she owes and this would require the bank's approval.

I maybe off base here so I'll watch for the experts to chime in.

I think additional information such as what her loan amount is and the value of the house we helpful.  I could imagine scenarios where it would work and others where it wouldn't.

Brett Goldsmith · Answer

Yeah there is generally 30 day deed restriction and at times one can't sell more than 110% in 90 days. Depends on the investor and what program it goes through.

Dave McEvoy · Answer

What would be my exit strategy? I've only done wholesaling until this point and I have read in the past that there are rules to flipping a short sale property, such as can't profit X amount or can't sell for X period