Creative Sub2 Deal
Alright so I'm on the precipice of taking on a Sub2 deal that is just tricky enough for me to question if I'm able to pull it off...
Lis Pendis has been filed already. The home is in arrears by about 11k, and has a total payoff around 196k. It's worth about 196 as well, so little to no equity. Mortgage is $1140, and market rent is around 1300-1400. Ocwen is the lienholder and is willing to restore the loan to good standing if it is brought current. I'm in Okaloosa County, FL.
The seller wants to stay in the home, so we disqualified short-sale as an option. But the 11k in arrears makes it too thin for work for a sub2 (at least for me) and too risky if the bank calls it DOS or continues foreclosure. But the father is willing to help.
I'd like to front the 11k in arrears, and recover it as a note personally guaranteed by the father, secured by a second position lien on the father's home. I'd then take the delinquent home Sub2 the Ocwen loan, and rent it back to the current owner at slightly above mortgage payment (1250). The father could co-sign on the lease to give me an alternate method to collect payment. The seller wants to buy the home back down the road, so the tenant situation is fairly ideal as long as his income doesn't tank again (divorce and job loss are the initial hardship reasons).
I'd also like to incorporate into my financing agreement something that states that non-payment of rent by the seller would result in non-payment of the mortgage, mitigating my risk in the mortgage. If the seller chose to move-on, I'd just put a new tenant in. The home is in fantastic shape.
What concerns should I have here? Should I worry about originating a 11k loan to the father? Is there more risk of the bank triggering DOS if the loan is in foreclosure? I'm not an agent, but one of my team members is a licensed realtor. What foreclosure protection law concerns do I face? I plan on having a lawyer review my paperwork and process prior to closing.
Am I just making this too complicated for the limited benefit?
@Bill Gulley curious to your thoughts on originating a loan like this . I don't think I'm triggering any red flags, but I've never acted as a lender before.