All Forum Posts by: Bill Hamilton

This would depend on

A) where you are

B) where the property is

C) What your title company is willing to do

D) What the lender requires

Here in Colorado I am confident my title company would let me close from most countries in the world. But I have dealt with lenders/Title companies that were a total pain in my rear.

Having been a renter in the past, I remember an incident where there was a leaking shower faucet. The property manager asked me if it was something I thought I could fix, as it was probably just a worn washer. I agreed and went ahead to replace that washer....something I have done numerous times on many different bathroom/kitchen faucets. Sadly, things did not turn out well. The house had been built in the 1950's. The nut to get access to the washer had rusted/bound/frozen or whatever. I applied WD40 and allowed it to sit overnight. And then I attempted to loosen the joint to replace the washer. It would not budge so I went big. The fact was, also, that at that time we had 5 people living with 2 bathrooms. One bathroom with multiple teenagers was untenable. As I applied force to try and loosen  the joint, the copper pipe twisted instead, and a huge leak started spraying water everywhere. I shut down the water into the house but.....

Point being that now there was an emergency call to a plumber who actually knew what the hell they were doing. The cost of fixing what I screwed up was probably 10 times what a good plumber would have charged to do it right the first time, when not under time constraints because it needs to be fixed NOW. 

I will chime in with @Bill Gulley here about the valuation. If you are looking at a tax assessed value or Zillow etc, then that value may not be very accurate. Even with that valuation, the loan is only 10% or so below market value. Not enough for you to take a profit and still interest anybody else in the deal. I was surprised to find that my research indicated that FHA loans are, actually assumable. I was under the impression that such assumable loans no longer existed. I've no idea how difficult that process might be but still.......very interesting. But, even if there was a great deal more equity here, I am not sure how you could legally make a profit on this deal. If you start trying to make a profit on both a real estate transaction and a loan transaction without being licensed in either, I fear you are crossing a line that could lead to a very bad ending. Keep in mind this is not legal advise from me.....just a gut premonition.

In my  (admittedly dated) experience from a lending standpoint, if the property is in a more rural setting then the additional land is worth very little. On properties in Texas, southern Colorado etc, when we would talk with an appraiser about how it would affect the value if we only lent on 2-5 acres as opposed to the 10-40 acres the property actually sat on, often the difference was only a few thousand dollars. Call an appraiser who knows the area and knows properties with lots of land. Pay them for their time and ask them for an opinion based on current lot size as opposed to adding that many acres. The answer may surprise you.

Are you actually talking with the lender or are you talking to a broker? Also, see if you can get a feel from your RE agent as to why the sellers are balking. The only reason I can think of is that they received a better offer but it was after your offer was accepted. Maybe you can match the other offer if so. You might be able to find a hard money lender that could perform in this timeframe but based on your figures it looks like you are putting down 30% or so. I know a great HML guy in Denver but he never goes above 65% and often not above 60%. Maybe try Travis at Pine Group Financial? He is local also and does bridge loans. This is a hugely short timeframe but who knows.....

I was never confused. You changed your position so............

David, you are flip-flopping on me. The areas I disagree with you/your expert are where you stated "Credit scores usually only consider open accounts", but then in your next post you say "Your example of the late payment account may be invalid because payment history takes both open and closed accounts into consideration, as I understand it." Which statement do you think is accurate? 

Closed accounts are still factored into your credit score and at this point, I am not sure which way you are going with it. Also, look up the stats for how many errors are on the average persons credit report and then tell everyone MUST and MUST. Also if you have ever tried to get something inaccurate removed from a credit report then you might understand that courts and legislation are far different from how the real world works. I've been trying to get the home address for my ex-wife off my report for more than a decade. It's a house I never lived in and one that she bought after we were divorced but they just ignore my attempts to have it removed. 

But honestly if you are happy with an expert that works in courts and legislature rather than observes in the real world, I have no reason to argue with you. You are welcome to prefer your way and I promise not to judge your preference. Meanwhile I will rely on my experience in that arena as it has worked for me time after time.

Have a great day (meant with no sarcasm....Life is too short)!!!

You haven't said anything about how much the property is worth. There are lots of hugely motivated sellers out there but sadly, many of them own houses that no investor would see value in. A once popular oilfield tends to indicate that this may be a declining market. Post details.

Sorry David, but in this case you and your expert are emphatically wrong. And what is reported to Congress or in case law only has a small bearing on how FICO scores actually function. FICO uses a proprietary formula to determine their scores. They don't reveal anything but the basics to anybody. And I mean anybody. I worked in the mortgage industry for many years and reviewed thousands and thousands of credit reports and have watched what impacts credit scores and how much. I guarantee that closed accounts are included in the score. No question, no room for rebuttal. If someone is telling you anything different, they are either lying or not very knowledgeable in this area. If you are in doubt, reach out to someone who has an open account that just went into being 60 days late a few months ago. Have them close the account and see what happens. Basically nothing. As it ages the negative impact will be less every month. But there is no way that closing that account pops their score back to "good". 

There are many variances to all of these things. Paying off an old collection account can hurt your score. New changes to FICO (look up FICO 9) will lessen the impact of medical collections on your score. The new FICO will also ignore paid collections. This may be what you are hearing from your expert. The thing is, none of this is currently true. And the banks who buy FICO scores have the choice if they want to use FICO 9 or stick with older scoring models. It's getting late and this is too large of a topic for me to want to try and explain at this point. I hope you won't take all this wrong but I think your expert is dealing with the legislative side of things but that doesn't mean it is filtering to the reality side of how FICO actually does business. And I have no doubt that if you want you can poke holes in some of what I am saying. But seriously, I bet I have seen the real world side of how FICO scores work and change over time by 100 fold, than your expert has ever looked at. That is not a ding at what he does. We are simply functioning in different realms. 

This may sound a little harsh but my wife worked with a restaurant group for a number of years. Their policy when they bought a restaurant with existing staff was to immediately fire everyone, then make them go through the application and hiring process. In their lawyers opinion it wiped out any preexisting claims, denied any chance of a discrimination suit from anything that happened prior to their taking over and allowed them to make logical decisions on who to rehire. It didn't make them super popular with the existing staff but them again, they weren't there to make friends. I had forgotten all about this practice until your post reminded me. I think I will make sure to keep that in mind if I ever buy something like what you stepped into. Sorry it doesn't help you now but.......