All Forum Posts by: Maureen Hannan

P.P.S. Feel free to reach out and connect with me. In my earlier career I was a high school and college English teacher. If there's anything I can do to encourage you in your educational goals (or in writing scholarship essays), I'd be happy to do so.

Hi Ricky!

I used to be a GED instructor, and I agree with earlier posts encouraging you to make that a priority. You are articulate and literate--so even if there's some social anxiety involved, I'd advise you to find an adult education class through your local school system and get some coaching and help in preparing to take the exam. I suspect you'll do just fine.

Once you've got the GED under your belt and some sort of part-time job, RUN to your nearest community college and enroll in an associate's degree program. Then be tenacious about getting academic advising--particularly on scholarships that may be open to you. If you can tell your story as well in a scholarship essay as you have here on this forum, I'm guessing you can rack up a number of different $1K and 2K scholarships for untraditional students. You would not believe the impact a well told story of overcoming challenges can have on people who want to give scholarships to deserving applicants.

Each time you get someone on your team--whether it's your GED instructor, a local civic group leader, or a college dean or counselor, you will increase your chances of succeeding. And you'll also keep growing in confidence.

I have no doubt real estate can be a great part of your overall plan--but it'll work best for you once you have a foundation of income, GED and (eventually) a 2-year degree under your belt. Not to mention the confidence that comes from making those steps and gathering a team of supporters to cheer you on.

I hope that helps. I really do think you could knock that GED off in no time flat. I saw students do it who could barely write a sentence.

Wishing you every success,
Maureen

P.S. Your family members have all of these doors open to them too. As a single 21-year-old without a formal education, your primary goal MUST be to get yourself into a position of strength. I know you love your family, but please ask yourself whether the obligation you feel to provide for them is healthy. Could they do some of these things for themselves?

I'm a mother of a 21-year-old and a 23-year-old--and believe me, I've been through some hard times. But I cannot imagine ever expecting my young-adult children to help support me. I'd sooner sling hash at Denny's or dig ditches. Sorry--I know I don't know the particulars of your situation, but I feel worried for you that you believe it's your responsibility to support parents and siblings. They must get "un-lost" on their own steam.

Since I'm a freelance copywriter, I can approach your question from my experience with online copywriting and content marketing (as opposed to coming at it purely from a real estate perspective). The key is to have good keyword research for low-competition keyword terms that will reach your market without breaking the bank. Strategic use of keywords, combined with attention-getting, split-tested PPC ad copy, will increase your effectiveness while containing costs.

You can use the Google external keywords tool--or you can use a premium software tool like Market Samurai or LongTail Pro to gather up your set of ad campaign keywords.

Good luck!
Maureen

Thanks, Tom Goans Point well taken. :-)

Thanks, Steve Babiak, for weighing in with your opinion/advice. Much appreciated!

Tom Goans I just reviewed all of the messages in this thread and wanted to thank you for your suggestion. I'm going to have a conversation with the borrower before turning the servicing of this loan over to a third party--it may just be that the best way for the borrower to keep up is to make this into biweekly or semi-monthly payments. Anyway, thank you very much for lending your experience to the discussion. ~ Maureen

Okay--I'll restrain my desires to try and take control of the situation. :-) Best just to get a third party involved and patiently wait this one out. I consulted briefly yesterday with an acquaintance who's a real estate attorney in Virginia, and he agreed with what all of you are saying. He also suggested that if it comes to the point that he is missing payments, a deed in lieu of foreclosure might be in my best interests.

Thanks, Bill Gulley Dion DePaoli and Marc Faulkner for walking me through all of this.
Maureen

Oh, and I implied but did not state directly--but the offer I had in mind was just exactly the amount of the loan--$420K. But I'm thinking the prospect of a brand spanking new kitchen would grab him. The guy loves to cook more than anything and hates that kitchen with a passion. Plus, I know he's struggled to keep up with real estate taxes, since he doesn't put aside the money regularly on a monthly basis. I am thinking it'd be a relief to him to know that someone else was responsible for the taxes...and that he'd not have any surprises, like with having to replace a major appliance that breaks.

Marc Faulkner Dion DePaoli Bill Gulley

The question about my prerogative to accept a lower payoff amount (re jumbo loan limit) got me thinking more about the parts of this I do have control over. Which brings me to a question: Should I consider making the borrower an offer on the home? Follow my reasoning below and please give me your opinions:

Fact: Because of the borrower's likely inability to refinance, there is a very high probability that I will be tied to this borrower and this property until the note matures in December 2019 (or until very close to that time).

Fact: The house is more likely to appreciate in value over the next 6 years if improvements are made to it, such as a remodel to the 1970s kitchen and better outfitting of the downstairs apartment. (The borrower has no means to make any such improvements, but I have rehabbed two houses now, and I have the knowhow as well as the means to do it bit by bit if I plan/budget ahead.)

Fact: The borrower's main motivation in buying was to get to stay in the house until his daughter is 18--for a fixed monthly payment lower than the rent he was paying. (I'm sure he'd love to harvest some appreciation, but I have observed him in this financial relationship to be more about short-term thinking and instant relief from pressures than about any sort of investment mindset.)

Fact: I am in the midst of selling two of my properties (with closings coming up this week and July 2)--and I am about to have a lot of liquidity until I reinvest. I could use that liquidity to buy the place and pay myself off--thus doing away with the note, which we all seem to agree is sketchy, unsaleable, and in all respects not all that desirable to own.

So...I'm just wondering whether I might find a way to make all of this better for myself financially by simply doing away with that note by making him an offer on the home that would address his main motivations. For example, I could offer him a 2-year lease at a rent that factors in insurance/taxes--with the option to add on a year at a time, based on his payment performance. He does take good care of the home, so I don't have concerns about him as a caretaker. I could, for probably 5-7K, make that downstairs apartment nicer and more private/attractive. Thus, I could take control of the place as (sort of) a duplex property and find a good stable professional to rent the downstairs and thus mitigate some of my risk with my friend's financial instability.

I would turn the property over to a property manager right away.

And I would not have to worry about the borrower timing the sale of the house properly come 2019.

Obviously, there are cons to this plan--and I know I'd need advice on how to structure the transaction and what the tax implications would be. And any offer I'd make would have the normal contingency clauses built in for appraisal and home/termite/radon inspections. But could this perhaps be a better solution than merely turning the mortgage management over to a servicing company? I'd at least get the appreciation on the home--and would be much, much less at the mercy of the borrower's financial ups and downs.

Thoughts?

Marc Faulkner Dion DePaoli and Bill Gulley,

I'm indebted to you all. This discussion has been really helpful.

1. I am going to turn over the servicing of the mortgage to one of the full-service firms mentioned. Fantastic idea--it'll make it all much more professional and will truly help the borrower by putting him on the path to begin to repair his credit.

2. SAFE Act. Yes, the loan predates the SAFE Act for Virginia. It was made on 1/20/2010. That is certainly a relief. I was so puzzled that neither my attorney nor the settlement attorney brought up that winkle in the interest-only loan. Feel better knowing it predated the legislation.

3. Exit strategy. Good advice. Based on my experience with this guy, he needs prodding to plan ahead sufficiently. It would be silly to just wait and assume he is getting his ducks in a row.

I'm okay with holding onto this note and continuing to collect the interest--as long as I can take the personal interactions out of the equation. I doubt at this point that he will ever go beyond sort of a subsistence mode with his freelance business--but if he can keep a tenant subletting in the basement, at least he's more than halfway toward making the payment each month.

I do believe the house is worth at least $525 now and that it will appreciate a bit in value--but of course, who knows for sure? I plan to get the BPO done just to get a bit more up to date on what it's worth.

4. Jumbo loan. Wow--just barely over that limit. I'll keep all of that (re interest rates and possible refi under the 417K mark) in mind. Very good to know.

And as for the cautions not to extend or add to this loan under any circumstances, I get it. Nothing could induce me to heap more time or dollars on to this experience. It'll go into the "seemed like a good idea at the time" archive. And I'll just put it behind me and be smarter going forward.

Thank you all for your time and your teaching. It's good to have a strategy to deal with this in a constructive way that preserves the value of this note as much as possible--while also looking ahead to its payoff.

Maureen