Sub2 Opportunity with Equity

[Curtis H.]

Hi guys,

I asked this question in another forum, but I honestly think it was the wrong one. Here are the details...

4/2 home in Round Rock, TX (15 min from Austin)

ARV $150K (conservative)

Foundation issue at worst $15K. Rest is cosmetic. Landscaping in excellent condition, as well as plumbing and electrical. One of the better looking homes on the block.

$94K left on a 20 year old loan with recently added $40K in penalties? Total at $131K according to bank (more on this later)

$1300/mo mortgage payment (HIGH), bank was accepting $1100/mo from owner, as that's all they could afford

Owners are DONE and ready to walk and need a little moving money and that's it.

So in regards to the penalties, the owners said they only owed $94K on the loan a month ago, but two weeks ago the number was suddenly at $131K after "penalties, late fees, etc." The owner seem to think that this was done because the bank finally wants the house back and wants to prevent them from having any equity on a standard sale. Not sure if this is common or not.

What would you do with this deal? My thought is if I can get the owners to have the bank waive the fees and penalties in writing or agree to a reasonable amount (Keeping the total due under $110K) then I could simply take this loan over Sub2 and rent it out or repair and resell for $150K. If the bank is not budging on the fees, then to me they want the house back, not a performing loan.

Please, any advice is needed. I need to act fast as the bank told them "you have some time" before they are forced out. To me that means 3-4 months max.