All Forum Posts by: Tami Olsen

Thanks @Ron S. - it's our first so pretty scary being in uncharted territory. The bones are great, kitchen and bath are big issues, electrical of course, everything else is cosmetic. And time. 

I forgot to ask - would a rehab loan eliminate some of these issues? I realize they come with their own set of restrictions. The mortgage guy said we could close before the bank takes possession but I don't know if rehab loans take longer to approve.

Wow thanks for all the replies! I am going to try and hit all of your points.

One thing I completely forgot about when I talked to the mortgage guy yesterday was the electrical. The panel has been upgraded but it doesn't look like the wiring throughout the house is. It didn't bother us as we have an electrician in the family and planned on rewiring the entire house anyway (I think current outlet codes are insane, but that said, this house is really on the low side and I've only lived in vintage houses)

@Ron S. Great questions! Three year roof - to my untrained eye based on my own roof experience, I'd say yes. But I'm not an inspector.

It's a cape and the second floor isn't heated and is used for storage. I know there are smoke and CO detectors on the main floor, I don't think there is anything upstairs. 

Exterior is vinyl sided and that's in good shape. No idea how the paint is underneath, the exposed clapboards inside the rear porch are not peeling.

There are replacement vinyl windows.

Newer back stairs to the back yard - that's all that has balusters. I assume the 6" is for a kids head? I didn't measure but by my photo probably not, but not a difficult fix.

One side of the house needs minor grading, the rest is fine. No water in the basement in that area, just something we noted as a future issue if not fixed.

No mold, rot, window bars, all rooms have windows, no stains, nothing leaning (surprising for the age to be honest).

The entire living area is wallpapered. There is peeling paint on the second floor (noted above as storage). We'd planned on insulating and finishing the ceiling on that. And now that I think of it, half of it has been finished and is not peeling, but someone painted the sheathing on the unfinished half, and that's what's peeling.

All mechanicals work except kitchen sink leaks. (probably 1940s vintage) We saw that and it's noted in the disclosure. 

@Harjeet Bhatti Even if the seller doesn't mind, there is probably no way we'd be able to get in there to re-wire completely while she is living there, in a reasonable amount of time. Nevermind we'd be redoing the kitchen and bathroom completely anyway... so do you do a "patch" to make the sale then go back and do it again? I had talked to the mortgage guy about the rear porch but completely forgot about the electrical - since it wasn't staring me in the face. It kind of went along with "of course we're removing wallpaper and repainting".

To clarify, I was not using THIS property for the HELOC, it was my current house and yes, Ron is right that I was denied due to DTI. I do have a business line of credit as an option. And will (hanging head in shame) tell the mortgage guy about the electrical issue. I did tell him about the kitchen sink.

Thank you again for the replies, this is a great learning experience for me!

Hi Mike - yes I know there are tons of options here but I'm trying to understand why a habitable house is supposedly not eligible for financing. Foreclosure proceedings have been started but the bank does NOT own the house. Except for the taped up window (which can barely be seen from the street), the house looks great from the outside.

I think I've read that an inspection can be waived for any purchase so it's not like someone will come in and say "I know someone was living in here but I'm going to deem it not livable". I've only bought one house in 1990 so I've forgotten a lot and I'm sure much has changed! Just trying to learn here. :)

We have looked at a pre-foreclosure SFH that is being "sold as-is, inspections for information only". It also says "broken glass in back, not suited for financing". NOTE: it is not listed as a pre-foreclosure on the real estate listing and it is not bank owned at this time.

The broken glass is only in an small porch addition that has structural issues anyway. It can be fixed or removed without compromising the house itself. There is one broken window so that's an easy fix.

I had someone in on our second visit to look at the foundation and the house is structurally sound (except the small porch).

It is currently being lived in, all systems work. It needs some electrical and minor plumbing, boiler works great but is old so it should be replaced. Roof is fairly recent, no signs of leaks anywhere, basement is dry. It will need a lot of cleaning and paint.

The seller said the bank won't take a loan to purchase because it's being sold as-is and she can't afford to fix anything, if it's a loan she will be required to fix things (like electrical). 

Is this correct? I'd have no problem buying the house as-is. I applied for an HELOC without knowing they looked at net income on my tax return and I am self employed so once they added 1% of the requested HELOC to my monthly debt, it knocked my DTI above their requirements. They suggested a traditional loan as I have excellent credit. I have some options with business lines of credit as well, but before doing this I wanted to check on why more traditional loans are being discouraged in this case (and if this is common). I believe rehab loans have more restrictions than I am interested in. We would do most of the work ourselves, and the house may also be eligible for historical tax credits (what's left of them).

Thanks in advance!

(ps I put this in the Foreclosure forum as I don't know where else it should be, and it will be a foreclosure if it doesn't sell in a few months)

This is in foreclosure but not listed this way. It is set to go to auction in May. At this time, they are taking "as is" offers.

How does it work if it goes to auction? It's listed above the price that is owed to the bank so if it sells now, the owner will get the balance after the bank is paid off right?

If she doesn't accept any offers and the bank auctions it, do they start at the owed amount or market value or what? What happens if the winning bid is significantly higher than what the bank wants?

Isn't it in her best interest to take an offer prior to the auction date?

Hi Maurice, she has already applied to elderly housing in 3 towns (but there are waiting lists). There is probably no reason she can't try a couple more towns. We have a couple of feelers out for alternatives for her, I can't imagine her thought of a hotel will be cheap. And it's been suggested she talk to a HUD counselor to see if there is some way she can renegotiate her mortgage with her SS income coming in. She also mentioned talking to a lawyer but she's going to have to get going on it.

In a perfect world, I would be thrilled to see her figure out how to keep it. My feeling is that there are a number of houses in our area at this price range, most without owners which would be much less messy. When I first found it I didn't know it was still occupied OR in foreclosure. We had a couple of cancelled showings and I did some searching and found all the foreclosure info.

Having anyone live in a rental at my expense is not an option.

@Christopher - I do give her credit as she is cleaning the place out for the inevitable, basement is done and garage will be finished in a week. She is taking the steps she needs to in order to leave. But I'm not sure she'll leave before she has to unless she gets accepted into one of the housing units she applied for.

Thanks for the replies! I actually have another question that I will do below.

@Thomas S. and @Christopher Phillips thank you for your replies!  I kind of figured that would be the standard advice and you are completely right, *I* do not want to be the one dealing with an eviction.

What has been your experience with owner-occupied foreclosures? Are there times that the house is sold and the owner still doesn't leave?

I am really not sure where this posts belongs as it touches on a few different topics. I had posted this on a FB group and it was recommended I try here as well for more advice on the investment side.

We met a woman whose house is being foreclosed on. She lost her job and has no income at this time. House is set to go to auction in May, she turns 62 less than a month after that (June) so will be eligible for SS at that time.

Is it common that when they look at modification and working out the loans, they would not have looked that far ahead to see she would be getting steady income?

She mentioned declaring bankruptcy to stop the foreclosure but I know I read (here I think)  that while it would do that, it will cause other issues.

She has no family left to help her and apparently her loan was an HELOC so when she defaulted they called it in in full (from what she told me, I have not seen any paperwork).

The house is semi-for sale so buying it is an option but of course she still has nowhere to go. She's applied for elderly housing in a few towns but in one of them I know the wait list is 1-2 years. Even if someone bought today (it's a cash sale) she said she'd want 2-3 months to get situated somewhere else, which could be a hotel.

Buying the house and keeping her as a tenant is an option but she would not be able to afford to pay market rate even with her SS. Close but no cigar. There are unfinished rooms on the second floor though which could be finished and heated, even with a bathroom so perhaps a roommate is possible with a shared kitchen? But I am not sure if that is legal - I know an owner can rent rooms if they live there but I am not sure of the legality if they are not living there. Think same entrance, shared kitchen and laundry. 

On the plus side, keeping her as a tenant means doing a lot less work to the main floor that she lives on, than we would otherwise. On the big minus side, of course she could manage to default again and then we'd be responsible for kicking her out.

My questions: is there any way to reopen the case with her upcoming income? Or is it a done deal now that the courts have issued an auction date?

I did contact HUD counseling and at least have the right phone number and will give that to her next week. They in turn gave me info for my state but I'm not sure that will work, but it's at least someone to talk to. I know she really should talk to a lawyer soon.

Someone on the other group mentioned that investors sometimes buy and let the owner live there for awhile after with the proceeds from the sale or whatever.

In a nutshell, my perfect world has this lady keeping her house until she dies or voluntarily leaves. Next best is we buy it as a rental (a) with her or (b) without her. 

I'm sure most feel 2b is the best option but I'd really like to see if 1 or 2a works as well. No, I cannot afford to lose money monthly waiting for her to "move on" either! - she's not *that* old and I'm not 20.

(some details have been glossed over so that I don't bore you but I will be happy to answer any questions)

Thank you!!!