All Forum Posts by: Jim McGovern

I know that in Texas if a property with only one lien against it is sold at a foreclosure auction for more than the amount of the loan being foreclosed upon, then the excess is paid back to the owner who was foreclosed on.

My questions relate to what happens if the property is not sold to a 3rd party at the foreclosure auction, but reverts back to the bank lender (i.e. becomes bank-owned REO property) and the bank later sells the property for more than it was owed at the time of the foreclosure.

Questions: Does the bank get to keep ALL of the proceeds from the sale of the REO property? Or does the bank only get to keep up to the outstanding amount of the loan that was foreclosed upon and the excess still goes back to the original borrower?

I'm just curious regarding the law, as it seems like IF the bank can legally keep the excess on REO sales, then there might be occasions when a bank has an incentive to discourage 3rd party foreclosure bidding on certain properties in the hopes that the properties revert back to the bank and can later be sold for much more.

Thank you.

@Crencenthia Brown

I recently sold a rental house to a vet who used a VA loan. As you probably know the VA permits $0 down payment loans, but the Buyer does need to have some money for closing costs. In my case, the Buyer did not have any money for a down payment, so he negotiated to have me (the Seller) pay for all the closing costs.

We agreed on a sale price for the house = $203k, but included $6k of Seller-paid closing costs. So the Buyer took out a loan for $203k, while I netted $203k -$6k = $197k before then subtracting my other selling costs (e.g. agent commissions, title insurance, etc).

The challenge in this approach is to make sure that the house will appraise for at least the selling price or more, as the VA is not going to lend you more money than the house is worth.

@Terrell Garren I'm on the same page with almost all of your suggestions. But I'm curious about the use of month-to-month leases. I presume you do M2M so that you never have to deal with renewals, can easily terminate problem tenants, and are still able to raise rents if/when appropriate. Are there any downsides to M2M?

One that I can think of is that it might complicate or even preclude cash-out refinancing, but that may not matter to you.

@Derek  In your post, you say "After already obtaining a property in Indy via a TK, I've decided to bring my business to a whole new level . . ."       

What is "via a TK" mean?   I couldn't decipher it.  Thanks.