All Forum Posts by: Derek W.

I have been pulling the key, meeting the appraiser with a full package, and all of that good stuff. I like the idea of the original appraiser filling a rebuttal, I didn't know he could do that, and he is pretty pissed that they brought his value down by more than 10% because that gives him a bad mark or something. So I am sure he would be willing. I just need to learn the process now and do it.
With regards to carrying a second, I will find the FHA addendum they make the seller sign and post the actual language, but it is really clear in the language that I am not allowed to carry back anything. I could out side of escrow, but then I couldn't record it, and therefor it would have little value or redemtion properties.
The buyers have offered to remove any repair requests and to pay their own closing costs. I think that is the extent of their ability or willingness to contribute.
If anyone has more info on FHA carry back of a second, I would love to hear the input.
Thank you.

My friend has ben struggling with his long distance rentlas for as long as I've known him. I finally got him to email me details. Please let me know what options you see for him. I think he is ready to off load them however he can to not have the headaches. Here is what he emailed me:
Here's the details about the property in Jackson, TN.
The Address is: 32 Brianfield Cove.
We owe about $104K
Currently, it's financed on a 10 year interest only loan at 6.25% with payments of $585/month. Taxes amount to about $2400 and insurance is about $1400. Indymac is the holder of the loan, and I started doing impounds last year to spread out the taxes.
It's a 4-plex, one bedroom units. Average rents for a 1 bedroom unit are $400. I've been asking $375 to get renters in there.
Because of a bad management company, I've had trouble renting units for over a year. Upon getting a new management company, I found out there was about $5K in damage between two units. The damage was flooring-- carpet, linoleum, blinds, refrigerator, and some other minor things.
We authorized $1200 in repairs for the 3rd unit to be fixed just so we could get it rented.
Once we got with a new management company, we started getting renters. Currently, we have 2 renters, and a third is lined up to go in this month.
The 4th unit still needs repairs-- new flooring. The repair bill is estimated at approximately $3K.
We are currently at the point where we cannot afford to make another payment. With our previous management company debacle, we went 6 months with little or no income on the property.
We cannot afford to keep the place. Once the 4th unit gets rented, it will pull in $1500/month.
We will be lapsing on payments starting this month-- January.
The value of the property is near what we owe. The comps in the area range from $96K to $120K on recent sales for other 4-plexes.

Those are sort of TV numbers on profit, but not too far off. With FHA it is rare not to have to pay 2-3% toward closing costs. Then there are escrow fees, title fees, home warranty, insurance, utilities. That would put it closer to a $30,000 profit. Not bad, I agree, but I have multiple FHA offers above $150,000. To lose $24,000 just because is pretty frusterating. It feels like the government being able to access your bank account and withdraw money, but I should be happy that they only took 1/3 instead of all of it. That extra 20k is my mortgage for the entire year on my primary residence! That would feel good to have the entire year of mortage payment while still in January.

Unfortunately they have made it illegal to carry back a note. You have to sign an FHA addendum specifically staing you will sell the home for the contract price only and there will be no other agreements or arrangements. So to do so would have to be outside of escrow, couldn't be recorded, and would be playing in shadyville.

I purchased an old 1920’s Craftman-style home for $69,900 in October. It was in poor shape. The siding was in need of major paint removal and repair, the foundation needed to be put on cement piers instead of wood, the kitchen and baths were totally gutted and replaced with new cabinets, granite, stainless steel appliances, you get the idea. The city had red tagged the property for multiple code violations, including the unpermitted apartment that was built in the garage. After about 2 months of rehab costing just under $20,000it looked gorgeous and was ready for the market. It was listed and immediately had eight offers (all FHA) submitted. We went with the strongest offer, which was for $157,000 and only asking for 2% closing costs. The first appraisal came in at $157,000. But since the sale price was more than 100% of the recent sale FHA automatically orders a second interior appraisal. This second appraiser brought it in at $133,500, using comps that were un-repaired bank-owned instead of what he should have used which was move in ready repaired comps. So now they are telling me I have to either reduce my price to $133,500, or cancel escrow and try to find a non-FHA buyer (since the appraisal attaches to the FHA file, I am stuck with this appraisal on file.) Does anyone have experience or advice on another step I may be able to suggest?

I explain who I am and my expertise and experience. I usually go over the foreclosure time line and try to help them understand where they are in that time line. I then let them know what to expect in the coming months and what their different options are. Some just need good honest advice, but aren't ready yet for my help. Others have tried a loan mod etc. and are ready for the next step. If that is the case I make a face to face appointment with them. If they just needed info, I tell them to call me back if they have any questions in the future, knowing they will likely need a short sale and my free, honest information will lead them back to me.

Will, it was said with a smile on my face and laughter in my heart. Nothing low hitting at all. I have read your posts for a year and a half and have appreciated all of your knowledge and sharing. I have attended REI meetings where you spoke and shared. I was teasing you and thought it was evident in the language of the post.
...but you did dangle a carrot in front of the donkeys eyes, and I do so want a little bite...

And don't forget well placed bandit signs. That is a nich way we investors communicate. My reticuler activater is keen on picking out those ads.

"That is certainly one way, but I teach another."

So has this whole thread really been a teaser ad for a course or seminar you are going to offer? Or were you planning on sharing your techniques with the B.P. members?

It is tough on a national discussion board when talking about State specific laws, so make sure you check anything said here against your specific state's laws. Though California and Arizona are very similar in their foreclosure laws, they still have differences, so I still wouldn't feel good about advising someone from another state.
Plus, two TOTALLY different things have been discussed that I want to make sure you understand.
There is a deficiency judgment which is a civil law suit that may happen after a foreclosure where a lender basically sues for damages and gets a judgment for the borrower to pay a certain amount, garnish wages, etc.
Seperately you may have the lender ask the borrower to "contribute" money or sign a promissary note prior to a short sale closing as a condition to close. This happens most often with seconds. This is not a deficiency judgement. It is voluntary, but may need to happen in order for all parties to sign off a full lien release. Like Crosswind said, make sure to look at the written short sale agreement prior to the close of escrow to see what the lender's terms are.