How can I help this person?

Question

This is my first post, but I have been reading the forums and listening to the podcasts.  I am really enjoying the excellent information here.  Thank you everyone!  I have not purchased any properties yet, but I have a friend who needs some help.

Here are the details:
She owes $77k on the property but FMV is only $74k
She is getting ready to walk away from the property and face foreclosure.  A  payment has not been made on the property since January.
The property needs around $5k in repairs.

What is the best way to help this person out?  Is a short sale the way to go?  The current loan has a very high payment of $869/mo when rents in the area only go for $797.

I'd like to help a person out of a bad situation.  What can be done?

Thanks for your help in advance.

John Kubala

Bill Gulley · Answer

You can't rent back to the seller in a short sale. :)

You could buy at a price to payoff the lender and then rent it back.

Pretty clear the owner doesn't want to stay....

Karen Margrave · Answer

Has she tried contacting the bank about a modification? Where are you getting your figures from? Does she live in the house? Does she want to stay in the house? She may be able to sell it with a lease option, or just lease it out. More info on her situation is needed.

Dawn Anastasi · Answer

Naveen Desai -- yes, I did a short sale last year and had to sign an amendment from the bank specifically indicating that (among other things).

Naveen Desai · Answer

@Bill- Wow, thanks for letting me know that short sale cannot be rented back to the seller.

Rob K. · Answer

If she sells the house, how much will she need to bring to closing? 10-15K?

If she doesn't have that money, could she get a personal loan or borrow on credit cards to pay it? Would be a lot better than a foreclosure.

Naveen Desai · Answer

If she is still interested in continuing to stay in the property and pay the rent ( current market rent),  there may be investors who can buy it outright for the price and rent it out. 
I mean the rental income is higher than a bank interest rate and so it will beinteresting for people. That is the reason people who have money kept in bank ( or self directed  IRA), can invest in this property and make some $s.  Ofcourse it will be a short sale buy and the buyer will negotiate hard with bank and it is possible!

Carlos Flores · Answer

I don't see how modification would help with only 3k difference in principal vs value unless she has been there a long time and they will extend the loan back out to 30 years.  I'd look into a short sale.  Maybe a subject to if you have a buyer with a down that can't qualify for a loan.

John Kubala · Answer

Thanks everyone for your responses.  Karen, she has contacted the bank about a modification, I am getting the figures from the owner.  She does live in the house, but she is already in the process of moving out.  She does not want to stay in the house.
 
I would be happy to provide more information, what information is needed?

BTW, this is in the Dallas area.

Bill Gulley · Answer

Dear, why do you give false hopes? A lease/option won't take someone out of foreclosure unless the bank accepts all the back payments. XOXOXO

If she is in foreclosure, do a short sale or pay it off, you could buy it and lease or sell it back......but I;m not sure if tenants can buy a property until Steve B, gets back with me on that. :)

Bill Gulley · Answer

Unless you have 7X,xxx dollars and can get a short sale, probably not. Can't save everyone, especially when you're late to the party. Say you're sorry and move on unless you have or can borrow the money,,,,,

How can I help this person?

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