Short Sale Going South Fast

[Andres Berdugo]

Good evening fellow Bigger Pocket members,

I'm working on a short sell for 2 story house in Cypress, TX that the homeowner was in the process of foreclosure. The short sale offer was moving forward until HUD made a determination that the short sale is no longer approved due to the homeowner being behind 72 months on mortgage payment. The house was purchased in 2011 for the loan amount of $238,570 (FHA) and the value at $240,955. The current full payoff amount is $343,864.31 with the upaid principal of $235,106. The ARV is $295,000 and estimated construction repairs and rehab is $160,000. The evicted tenants made a mess of the property.

What are the options? Can this deal be saved?

My strategy is the following: I'm looking for the homeowner to deed the property over to me with no money, obtain durable power of attorney from the homeowner to speak to the bank on behalf of the homeowner and negotiate down the $343864.16.  I'm looking to renegotiate the $343,864 down from the bank to a loan around $250,000 and then do an owner-finance, subject-to and wrap around mortgage, to pay down the principal and the loan. The construction rehab will be financed by hard money lenders.

I would like some advice on this renegotiation strategy if it will work or find out an alternative method to save this deal and prevent the property being foreclosed on. Any advice is greatly appreciate it. Thank you, Andres Berdugo