All Forum Posts by: Account Closed

The problem with using MLS properties is that you're 6% in the hole on your profit before you've even made an offer.

Buy a list that of off-market properties (not listed) with absentee owners. 

An "appraisal," even from a licensed appraisal, is nothing more than an educated opinion, subject to all sorts of biases . Appraisers also follow "bank rules" and we know how that generally works out. When you're  paying for the appraiser, always meet them at the home and walk through the appraisal with them, educating them as you go. When the bank's appraiser did the first appraisal on the green home I'd just built, they came in way low. By insisting the appraiser redo the appraisal, I came armed with information and wound up with a new appraised value almost $150k over the original appraisal.

I just got an email from WCAP Financial Services stating that I've been pre-approved for 80-100k in funding....interesting since I've never applied to them. Doing a search on them brought me to this thread. I've got a good scam nose, too.

Hi all,

The potential Obstacle under discussion has been solved (sort of....)

I met with my personal attorney on Thursday and got what I think is a satisfactory answer to at least part of what we've been talking about in our discussion. A quick refresher: Does NC General Statute 75-120 to 75-122 - the part about paying at least 50% of the appraised value of the home to the homeowner -  put a stop to legitimate foreclosure rescue in North Carolina?

My attorney stated that the statute is what they call "unsettled law," meaning it hasn't been tested in the courts. Consequently, nobody knows how it might be interpreted by a court, and therefore makes attorneys and title companies cautious, nervous, and leery of being involved in foreclosure transactions, especially when it comes taking the property "subject to..

One of the unsettled question is "does taking the property Subject to an existing loan constitute payment since the seller is still completely responsible for the existing loan?" Eventually, that may be decided by the courts, but do you want to be the one who possibly gets caught up in that scenario?

That's the question every Investor who works with foreclosures must answer for themselves.

For me, I'm moving ahead unless something or someone changes my mind.

This has been really good for me, and I hope it has been good for all of you, as well. I'm not done here by any means, but through this process, I've been able to walk to another place in the room and see it in different perspective. Late. More later.

Yes, I've had several attorneys tell me the same thing. I even had one tell me he'd have to check with the title to see if it could be done....I said, "huh???? You're the attorney, aren't you supposed to tell them what they can and can't do?"

Fred: That's an interesting way to do it.....I'm NOT an attorney: I don't even play one on TV, but here's some things I would consider: Let's say the seller is named John Smith

When you create your LLC trust, I would name it something like the "Smith Family Trust. " That way, when the bank sees the insurance notice or that the payments are coming from someone else, they just make an assumption, because it's all coming from the "Smith Family Trust." Remember, even though you may close on the Sub-2, the sellers are still liable and the bank could still call the due-on-sale clause.

I would be leary, though, of bringing the note current without controlling the deed. What's to prevent them from not closing? I would think you need to get them to sign the deed over to you with the condition that you cure the default by a certain date or the deed comes back to them. What I would do if they sign the deed over to you with that condition is in the meantime - with the deed in hand, but not recording it - record a memorandum of interest with the county so if the sellers were to renege, they could not sell the property without getting your interest released.

Be sure to check with an attorney to make sure you can do this your locale, and how.

Isn't there anyone out there who's actually closed on foreclosure using Sub-2 financing?  I must have talked with 20-25 attorneys, the vast majority of whom said I could do this in NC, but I finally found ONE who said I could, and I'm talking with them again on Thursday.  

I hope I haven't hired the accountant who, when asked what's 2+2, said "what do you want it to be?"

The first foreclosure attorney I talked with - an investor and a member of the local REIA I belong to and one of our sponsors - told us at the last CREIA meeting that Sub-2's on foreclosures are dead in North Carolina (the lender can make a case that once a property owner is late on a payment, they are in default. The rest, like a NOD, is just paperwork.

I'm meeting with my other foreclosure attorney on Thursday who understands and does Sub-2's (one of the few that will) and will be addressing the statute. 

Thanks for the information from Matt and Fred. I'll be adding those questions and scenarios to the soup with my attorney on Thursday. I've also posted this info on other forums I belong to and have not yet found someone who has actually done and completed a Sub-2 foreclosure in NC.  It would be HUGE to see how they did it.....otherwise, it's all speculation and "what if's", right?

Last for now, ask 10 attorneys the same question, and you're likely to get 10 different answers...that's why we have courts, which I definitely want to stay out of.

Fred, thanks for your reply. Yes, the cash flow is awesome if you can get it done....but...

In your example let's assume you have an appraised value of $60,000 as you are apparently required to do. As I read the statute, in this example you would be required to pay the seller/homeowner/transferee a minimum of $30,000. What you are giving the seller in your example is $11K.

The statute offers no consideration or mention for a seller's equity position. The question at this point may well be, if the seller is still liable for the Sub-2, how does this count as part of the minimum 50% of what you're required to give the seller? Further, how do you get the bank to accept this?  

Admittedly, this a badly written statute that only serves to complicate the process. Would you have to pay the seller's mortgage down to $30,000 (Half the appraised value?)? if so, add another $8,000 ($19K - $11K) to your costs to get into the deal and pay the seller $20K and the bank $10K.....don't forget to pay for the Appraisal while you're at it. Assuming the court allows you catching up the back payments as part of the required 50% of FMV.

Now you've got the loan balance down to $30K, but with the Sub-2 - if the bank allows it - you're still making the same payment....put 10-20% down and do a new loan. How's your cash flow look now with a $19K + initial investment?

Phew!!!

Now let's apply the same math to a $200K house.....

Greetings from Asheville, NC.

I apologize if there's already been a posting on this subject. The forum needs a search engine. I've also posted this in a Greensboro, NC local forum with about 5 members.

I've just run into what I think is a major snag into doing foreclosure rescues using "Subject to" financing in North Carolina due to NC General Statute § 75-121. Here's what it says in a nutshell:

Foreclosure rescue transactions prohibited; exceptions; violation.
"(a) It is unlawful for a person or entity other than the transferor to engage in, promise to engage in, arrange, offer, promote, solicit, assist with, or carry out a foreclosure rescue transaction for financial gain or with the expectation of financial gain, unless prior to or at the time of transfer, the transferee pays the transferor at least fifty percent (50%) of the fair market value of the property as determined by a licensed appraiser. An appraisal to determine the fair market value of the property must be performed no more than 90 days prior to the transfer."

Nice gift to the banks, huh?

I'm meeting with an attorney in Asheville next week who specializes in foreclosures. At our local REIA meeting he publicly stated that § 75-121 makes it impossible to do a "Sub-2" in North Carolina if the loan is in default (a loan is technically in default if the homeowner is late on a single payment). Please note that the statute makes no reference to equity positions, Just FMV. In other words, it appears that even if a property were underwater, you'd still have to pay them 50% of the FMV.

Yes, I'm choosing not to automatically take the opinion of a single attorney...I'm also checking with my own and trying to do due diligence.

Have any of you completed a Sub-2 foreclosure in NC or know someone who has? I'd love to talk to you.

Thanks for reading this.

Gary