Can bank block bringing loan current for Sub2 deal?
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Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
12yThey just don't care, especially the attorney. Its all just routine stuff to them, I'd say well over half the foreclosures get reinstated and mom and dad write a lot of those checks. They are cashier's checks anyway, so they dont know where they come from. I call up and say "Hey, my name is Darrell Shepherd, I'm working with john and suzy homeowner to get their loan reinstated, who do I send the letter of authorization to?" They can't talk to you about it until the borrower signs off on you getting the info. On your first one just call them and ask what they need in order to discuss the account with you (POA, LOA, etc). The bigger atty offices will look up who's handling the case and get you do them, the smaller ones will just give you their fax or email. Sometimes it takes a day or two to get that processed after you send it in with the real big ones. Hard to do on a super tight timeline, but I've done them in under a week before, just pretty stressful because they are slow and you cant do much to rush them, although they will try if they know the sale is coming up.
The atty office will just be relaying info to you from the bank. Reinstatement amounts and such. They simply just don't care where the money comes from or what happens after they get their fees. You aren't doing anything wrong, no need to be all shady and stuff, I've had convos about my business model with the paralegals while we were sitting there waiting for paperwork and such, especially when I was doing several a month with that one firm. You aren't assuming the loan, by the way, you need to get that vocab out of your vernacular, there's a difference between buying sub2 and assuming and these aren't assumable loans we're dealing with.
I've never really have any direct contact with the bank unless I chose to. I do call and get the payoff myself, so the bank has the POA or Letter of Authorization on file for that, but everything about the foreclosure is done through the atty. Once the loan is caught up and no longer in foreclosure, then its just like any other sub2 deal.
62 Replies
- Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes12y
They just don't care, especially the attorney. Its all just routine stuff to them, I'd say well over half the foreclosures get reinstated and mom and dad write a lot of those checks. They are cashier's checks anyway, so they dont know where they come from. I call up and say "Hey, my name is Darrell Shepherd, I'm working with john and suzy homeowner to get their loan reinstated, who do I send the letter of authorization to?" They can't talk to you about it until the borrower signs off on you getting the info. On your first one just call them and ask what they need in order to discuss the account with you (POA, LOA, etc). The bigger atty offices will look up who's handling the case and get you do them, the smaller ones will just give you their fax or email. Sometimes it takes a day or two to get that processed after you send it in with the real big ones. Hard to do on a super tight timeline, but I've done them in under a week before, just pretty stressful because they are slow and you cant do much to rush them, although they will try if they know the sale is coming up.
The atty office will just be relaying info to you from the bank. Reinstatement amounts and such. They simply just don't care where the money comes from or what happens after they get their fees. You aren't doing anything wrong, no need to be all shady and stuff, I've had convos about my business model with the paralegals while we were sitting there waiting for paperwork and such, especially when I was doing several a month with that one firm. You aren't assuming the loan, by the way, you need to get that vocab out of your vernacular, there's a difference between buying sub2 and assuming and these aren't assumable loans we're dealing with.
I've never really have any direct contact with the bank unless I chose to. I do call and get the payoff myself, so the bank has the POA or Letter of Authorization on file for that, but everything about the foreclosure is done through the atty. Once the loan is caught up and no longer in foreclosure, then its just like any other sub2 deal.
- Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes12y
btw, you absolutely need to listen to Greg about the title search before you give any money up. You need at the very least: a P&S contract, a POA, a deed, a CYA letter, a title search, and a payoff figure (in writing) before stroking any check to the atty or sellers.
I will do a title search Monday, but I know there is a second Unemployment lien for $8K that I have to pay which I already factored into my numbers. The real estate agent already sent me the title report from Chicago Title Company showing the two unemployment liens for a total of $8K as mentioned above.
I do have a payoff figure, and reinstatement amount in writing as well.
I will get the contract and POA today, and have the Seller Acknowledgment letter document as well that he has to sign saying he knows exactly what's going on and is not being forced, etc. Now regarding the deed, which has to be notarized, is there a document someone can point me to to make sure that is done right?
Greg, I have a couple rentals in Round Rock, and if you know of some good oportunities that need a little cosmetic work and can be good rentals in Austin, RR, Cedar, etc. Send me a message :-)
@Greg H.@Darrell Shepherd @Hattie Dizmond @Jay Hinrichs
Ok everybody I'll be heading to the owner in a couple hours to get the paperwork signed. And since I have never bought a home that didn't involve a loan, I need to be certain I'm bringing the right things and don't have to double back and ask for more signatures. Here is what is what I think I need...
Purchase Agreement/Contract (2 copies)
Seller Acknowledgment letter (2 copies)
Release of Information Form (1 copy)
Earnest Money ($20? or should I do $100?)
What I am confused about is the deed...Since this is not a closing, but just getting him to sign the contract, do I need a notary? Am I getting the deed now? This is the part that confuses me. If I have a signed purchase contract do I have "control of the property" at this point? My thinking is get the contract signed and do due diligence with the bank with FIRST order being to get them to postpone the date to give us breathing room. If they say we want our money now, then do I need to get the deed (assuming I don't have it by signing contracts tonight) and then make payment?
- Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes12y
I'm not sure in Cali, but I usually do the P&S agreement, then get the POA and authrorization and CYA letter, then schedule the closing with an atty. I've done table top closes, the deed is an amazingly simple document, but the atty lends credibility to the whole thing so I usually pony up the money and have them do it unless its a low dollar deal. They really don't do much other than the title search (sometimes they add crap just to justify their fees, which makes it worse- I've literally told them they were being silly at a closing table before, which is kinda fun, they really dont know what to do when you call them out on that kinda thing, they're so used to people thinking they are the all knowing OZ because they have a JD), but I pay them anyway because it adds a lot psychologically to the sale for the seller. Gotta do what you gotta do if you're on a tight timeline, I wouldn't pay the arearages without a deed and clear title, so you may want to get one signed before you do an official closing just in case. There aren't any particular exact ways to do this stuff, you just have to know how it fits together and work within that.
Sounds like you are on the right track, though. I dont know your forms and mine are on a hard drive on a laptop that crashed a week ago and I dont have them to share, but mine clearly state purchase price, amount of loan being taken over, net to seller, etc. My forms are originally Lou Brown's from the 90's I think. I've reworded them some, but they are basically the same stuff from 15 years ago. I wanna say the Georgia Realtor (GAR) form has Sub2 stuff in it too. I know it did when I was doing a lot of that stuff.
I agree not to pay anything other than earnest money deposit until I have the deed and clear title. I have the title report, and of course it's not clear with the unemployment lien, but I would pay that off at closing. So the question is...can I get the deed without a formal closing? And then close later?
I have thought it over, and my main goal is to get them to postpone the sale without sending any more than about $10K out of pocket tomorrow. And I need it in writing. If they say they need all the money tomorrow I walk. I'm too new and it seems like a recipe for disaster. I need AT LEAST a week to feel comfortable with parting with $40K, as it will allow me time to do my due diligence properly.
Tricky part is I want to negotiate the amount to reinstate the loan to limit my out of pocket exposure, yet I need them to have incentive to stop the sale. Even if they agree to let me pay half and tack the other half on the back end of the loan, I'll do that. But I'm not sure how motivated the bank is to foreclose. You think if I tell them I have $25K to send them to reinstate the loan, they will go for it? Or is that rare that they discount it?
- Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes12y
Depends on a lot of things. Big banks are generally going through the motions, they don't feel the losses. Smaller ones don't want the house back.
I've talked them out of foreclosing with a phone call and I've had them say no to $10k in money, just depends on who you're talking to and their motivation. There is no 'norm', just what most tend to do.
Good call on the attitude, only I wouldn't risk the $10k unless I knew it was safe. Any time someone rushes you it's smart to bail. Buying, selling, renting, fixing, anything. If they pressure you to do something before you've done your DD just punt it. I can't tell you how many times I've gotten that lesson. Not saying being able to act fast isn't a good thing, my best deal ever came to me on a Wdnesday and I was fully commited on Friday, but when there are unknowns and people are pressuring you to ignore them it usually doesn't end well.
- Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes12y
proof of atty:
I hereby declare ______ as my attorney in fact to deal with _____ property, including, but not limited to blah blah blah with loan blah and including all rights of transfer and encumbrance.
That's terrible verbiage, but they're simple. Google real estate power of attorney. Just make sure you read (and understand) the rights it gives.
If this property is an owner occupied, one to four unit residential property and you are an investor...heads up!
Of course, you understand that you must use the statutory language and format as required by CA civil code 1695 or you can be in a crapload of trouble.
- 12yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
this is not how pre foreclosure sub too works on the West coast... Also Curtis there are laws about foreclosure rescue in CA. have you checked into those... We have them in Oregon and WA. I believe in CA the seller has a right of rescission and this document must be presented to them prior to selling you the home. Its against the law to enter into an agreement with out this document.
$20 or $100 EM is a joke in my mind who would sell a 450k property with that.. I would not even entertain it.. but that's me.
Darrell we don't use attorneys to close on the West coast we use title co. And no title company is going to prep a deed without a full escrow.
When we were in this business we created our own deeds got them signed and notarized then recorded them ourselves. We also had privalages at the Title co. we could do a title search and get a date down over the phone.. It was not insurable but its a risk you take if your in the last minute foreclosure rescue business. So we know what title was like before we went to see the client.. Now when I was doing business in Atlanta I understand you don't have the same access to title plants and things are MUCH MUCH slower in that regards in your market.. But title company can do a date down for us in 90 seconds on the phone. enough info to make a under 30k decision.
Transaction went like this.
Get Deed signed and notarized hand over down payment to seller usually 5 to 15k or more.
Same day take deed to recorders office an record.
Send funds in to stop the sale same day Usually through a courier and in person. Cashiers check. As they did not accept wires.. now that may have changed.
this is how last minute foreclosure rescue works in our neck of the woods. I doubt Curtis unless he gets relief from the Trustee has the time to do anything else. and I doubt he will get the sale postponed because he has a EM contract with a whopping 20 dollar deposit.
Yes I totally understand that, that's why I'm apprehensive to have them sign one unless i know it's correct. I don't have the luxury of an attorney right now on a Sunday and I'm heading over there to the seller's in an hour.
I'm ok with just having them sign the release of information for the foreclosure attorney and bank, so I can call the bank in the morning to see if this is even gonna happen. If the bank is willing to play ball and postpone the sale, then I know this deal is gonna happen and I'll have a day to get that form together and not be in any legal doo doo.
- 12yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I suspect if you can actually talk to someone tomorrow the conversation will be something like this...
" the amount to bring it current is X the sale is scheduled for Y you must have a cashiers check or wire to us by end of business today"
that is what we experienced and probably what you will get. I doubt your going to get into any dialogue over extending the sale. owner could always BK though
Even if they say, "You can have a check to us anytime before the sale, and we will stop it" then there is likely to be a sale. I'm not even sure how aware they may be of the CA 5 days rule, as they are in Oklahoma. So I will ask them point blank, when is the last day you will except payment for reinstatement and see what they say. If they say anything other than "today" I will ask them to quickly put it on paper and email or fax to me. Then we are in the game. If they insist on "today", they can have the house. That simple.
Now on the contract I have, which is @Michael Quarles version from his site, I'm trying ot figure out what I put for the purchase price. Total payoff for loan is $459K and some change, but I am paying the realtor commission (I put 3% in the contract), the $8K lien, and about $6K for sellers to walk. The agent commission is in as a separate line item, but do I make the purchase price $459K + the lien and cash amount?
Also, what if I talk to the bank tomorrow and they say they will give me a $10K discount to reinstate the loan at $30K instead of $40K? I want to make sure I'm not passing that to the sellers.
Yeah well the difference here is that this will not result in a deadly outcome. If it doesn't work, you live and you learn.
All I really need is time, and the bank will let me know tomorrow if they are willing to give me that. Without time to do this transaction right (attorney review the contract, proper closing, legal POA paperwork, maybe put the prop in LLC to protect my personal assets), I don't want to do it. All these thing can be done in a week, but not a day.
- 12yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
The Oceiana pilots all three of them missed those instructions last year landing at SFO
Great quote I will have to steal that one !!
- 12yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
In my opinion once you figure out the foreclosure disclosure laws that include the right of rescission.
I suspect the only way you will get any attention at the trustee is to also include with your offer a copy of a Cashiers check made payable to the Trustee for the amount to bring it current. Along with your authorization signed by the seller allowing you to talk to the trustee.
An EM agreement just is not going to do it at this late stage as Rick is alluding too..
When I did this business prior to 08 and the laws changed this is what we did.. The trustors came to us ( fully in denial) 24 to 48 hours before the sale. the sale was not going to get postponed just like I find it unlikely this one will be... So you need to have your Approach loaded into the auto pilot you need to know the weather you need to know your final landing weight speed decision height and go around protocol and that has to all be briefed before the approach lest you run into a sea wall in clear blue skies with no wind or weather.
Its really exciting to do these last minute deals but you need to be fully prepped otherwise your just waisting a lot of time and energy on something that has no hope of happening. And you don't want to land 700 feet short of the runway and total a 100 million dollar aircraft.
That is sound advice, and I did print out the right of rescission and brought it with me. So thank you for that. The idea about the cashier's check is a very good one and I think I will use it. The first thing I will do is ask for the highest ranking person that would handle this situation, as @Hattie Dizmond suggested. I will do it in the nicest way imaginable and make it all about the homeowner being able to reinstate the loan but we need to move as quickly as possible.
See I don't need them to postpone the sale, I already doubt they will. What I need for them is to agree in writing that if they were to get a cashier's check hand delivered to them on Friday morning, that would be enough to stop the sale and bring the loan current. The sale isn't until the following Tuesday. By law they can say no. I just don't see why they would. All I need them to say is "yes that will take care of it". And of course give that to me in writing. That will give me 3 extra days to do everything right (or at least better), have a RE attorney look over my paperwork, call a title company, and have a proper closing.
I have faith Jay! They will take the money and run!
Just a general note on pesky REALTOR® commissions:
In most states, the agreement for commission is between the seller and the broker. The broker pays the agent. If there happens to be a buying agent, the broker will pay their broker, and then the buying agent will get paid. If there does not happen to be a buying agent, the commission is split as stated in the listing agreement.
If you would like to have a "buyers agent" you can hire one. You can pay them or they can take whatever the listing broker gives them (that is usually the case).
Just like any profession (plumbers, contractors, lenders, & even investors), some Realtors are not great. Some will just put a sign in the yard and pray for a buyer. He may be one of those agents. OR, he may be spending thousands of dollars every month on marketing listings (like me) and you don't necessarily "see" everything he is doing to market and sell the property. Either way, you are dealing with a contract that you have no control over. It is between the seller and the broker.
You have a lot of questions and many of them would probably be answered by a GOOD Realtor and they might find a way to get the deal done. Getting this property under contract is one thing ... getting it to close is a totally different issue.
Why don't you buy it at auction??
If the home doesn't sell at auction, maybe you can try a shortsale and get a better deal than the "subject to". If the seller is already being foreclosed on, then a shortsale might be a better option for both of you. It affects his credit for 3 years instead of the 7 years that a foreclosure hurts. Find a Realtor with shortsale experience and bank connections and they may be able to get it done (for free to you). I don't think you will be able to go the shortsale route if the bank is a few days away from the auction, but if it doesn't sell, initiate the process by submitting an offer in which the payout to the seller is much lower than what he is owed. Hopefully the listing agent with prove worth his salt and will be able to get it done for you. We have recently done this with a property that went to auction and didn't sell. Now we are in talks with the bank and have an offer on the table.
Talking with the bank:
If I read right above, you are going to Owner Occupy this home? If that is the case, I don't see any concern about telling them that you would like to buy the property and stop the foreclosure process. You will probably have to get a 3rd party authorization. They would probably welcome the buyer, but they do NOT like talking to investors.
After fees, closing costs, title, etc etc, the seller may be coming out of pocket (to save the 3 year shortsale credit hit) or you would have to go through the shortsale process. Again, maybe I am missing something, but I don't see the sub2 working in this case. It's just my opinion.
Good luck either way and let us know how tomorrow goes!!
In my contract I put that I will pay 3% of purchase price for the listing agent on behalf of the seller. I just saw the sellers for a second time in two days and not only did the realtor not show up AGAIN, but the seller asked "have you heard from him, because I haven't". I get where you are going, but this guy is not what you are describing.
I thought about the auction route, but there is one huge problem. ALL CASH. We are talking $460K CASH. No thanks.
The burning question I want to know is...
Is it common that a bank will NOT accept a payment for the reinstatement amount days before a sale? I mean they literally said you can't send it, or if you do we will sell anyway? That's what I want to know. I just find it hard to believe that two days after the reinstatement period ends, they will deny the money with the sale a full 3 business days away. Anybody had this happen to them, or know if it happening to someone else?
And is it possible to close in one day with a title company if all the funds are in hand? Again this is a Sub2 closing, not involving a lender.
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