Portland, OR · Member since 2013 · 14 posts · 2 votes
Greetings BP,
I have a grass roots lead in a very nice neighborhood in Portland, OR.
The homeowner hasn't made payment in 4 years! The unpaid principal balance represents just about my exact MAO in order to make a major rehab pencil with a 100k return There is no second on the property.
What can I do? Can I contact her bank directly if I get her approval or does she need to do that? From what I can gather, the property has to be listed for a minimum amount of time on RMLS? I.e. I can't craft an agreement between seller, bank and me without the deal ever hitting RMLS? Is that correct?
Thanks for any advice! I know there's something here...
@Account Closed That is your version of the right thing. You have no idea if this seller has a debilitating medical issue, a death of the main income producer in the family, etc. The seller has no responsibility to anyone but themselves and their family. If they can put food on the table because they skipped their mortgage payments, then I vote their family doesn't starve. You are projecting a narrative on this seller without knowing any of the details. I have completed over 300 short sales in the last 3-4 years. I have seen retired men drain their retirement accounts in order to keep up on their payments only to have it go to foreclosure anyway. Is that the right thing?
I have seen banks call homeowners and demand their last $5k or they'll "be out on the street by the weekend" when they easily had another 3-4 months in the house regardless. Is that the right thing?
That fact is, this seller owes you or their neighbors nothing. They owe it to themselves to keep a roof over their family's head and food on the table. If the bank wants to take the house back in 90-180 days, that is up to them. If they want to wait 4 years, that is also up to them. But I guarantee you, the bank will make more money off of this by waiting it out until 2014 instead of foreclosing in 2010. Now they can sell the home for more $ and a homeowner had a place to live. They probably kept it looking nice and it did not become another delapidated vacant house on the block. That is the "right thing."
The unpaid principal balance and the total amount owed are different. If someone owes $100k, but unpaid interest and charges put the total payoff to $150k, you need to do a short sale in order to get it at the $100k price. A short sale where the bank is receiving the unpaid principal balance, but is shorting the fees and interest, is much easier to close than one where the principal amount is also shorted. The deal may make sense at $100k, but not at $150k.
Thanks. I missed the unpaid principal vs arrears on this one. I thought the OP said he could buy for what is currently owed. But what is owed is obviously more than principal, given the four years of missed payments.