Investor · Elburn, IL · Member since 2010 · 80 posts · 35 votes
Had a deal to do a short sale with HSBC as the lender, When they found out I was an investor they wanted me to change the contract into my own name and then resubmitted. I did it, then they said that because I was going to sell for profit they won't accept my offer. Very frustrating, how do I get around this? My realtor says to just buy in my name then quitclaim into my s-corp, is any one doing this? If I do it this way and take out the addendum in my contract saying I may sell my interest at a higher price. Would I set myself up for trouble?
Chances are that if either the above is the investor, then they do not want to sell to investors becuase they believe flipping constitutes mortgage fraud.
If the loan belongs to neither, then it could be the investor or the service agreeement has restrictions upon selling to an investor who intends to flip.
I REALLY doubt it is anything personal becuase these servicer's are in the business to make money and emotions do not play a major role in the decision process.
Before you go any further, investigate who the investor is. If not, FNMA or FHLMC, then you might take another shot by dropping the disclosure or burying deep in the contract. I would not recommend proceeding without disclosure.
If FNMA or FHLMC, I would not even touch them with a ten foot pole.
Real Estate Investor · Walled Lake, MI · Member since 2010 · 121 posts · 66 votes
15y
What does the addendum say exactly? What if you setup an LLC and quite claim the property into the LLC after closing. Then you can just sell the LLC...
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
15y
Sounds to me like you made the mistake of not disclosing up front. HSBC is generally ok if you disclose up front. If they found out late in the game, they are pissed.
Really not sure if the schemes you are considering will get you in trouble or not but it is walking the line. They could certainly make a claim that tried to mislead them.
If the approval letter says you can't transfer in x days, then I would think that would include a QC.
Chances are that if either the above is the investor, then they do not want to sell to investors becuase they believe flipping constitutes mortgage fraud.
If the loan belongs to neither, then it could be the investor or the service agreeement has restrictions upon selling to an investor who intends to flip.
I REALLY doubt it is anything personal becuase these servicer's are in the business to make money and emotions do not play a major role in the decision process.
Before you go any further, investigate who the investor is. If not, FNMA or FHLMC, then you might take another shot by dropping the disclosure or burying deep in the contract. I would not recommend proceeding without disclosure.
If FNMA or FHLMC, I would not even touch them with a ten foot pole.
Real Estate Investor · Daytona Beach, FL · Member since 2009 · 18 posts · 8 votes
15y
This is apparently something they are pushing hard in the past few days. I just had 2 deals countered today at 100k more than FMV and the servicer specifically stated it was because I was a company seeking a profit.
Pleasant Hill, CA · Member since 2008 · 428 posts · 43 votes
15y
Is there ever a method to the banks madness? Often what they do does not make sense to regular people. As the seller they and sell to whom they wish though I guess.
Investor · Elburn, IL · Member since 2010 · 80 posts · 35 votes
15y
I did disclouse upfront, they were made aware that I was an Investor. I didn't hide the fact.
The loan was neither a Fannie or Freddie.
The wanted me to take out the addendum "Offer contingent on Buyer wholesaling this property if the existing mortgage holder agrees to accepting a discounted payoff. Seller has been made aware and fully understands that buyer may sell this contingent interest at a higher price."
When I agreed to do so the negotiator said nevermind we already know your an investor.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
15y
OK, in the OP you said you "had a deal" and then "when they found out". That implied that they found out after you had a deal (got an approval).
I don't know. Scott will know best on this I am sure. I have never heard of someone putting the fact that they want to "wholesale" the property in the contract. I wouldn't think many lenders would like that at all.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
15y
Originally posted by Scott Hubbard:
I REALLY doubt it is anything personal becuase these servicer's are in the business to make money and emotions do not play a major role in the decision process.
Scott, I know you know your stuff and you give very good advice, but are you saying you never had a rough "relationship" with a loss mit and they somehow "lost" your file or it found its way to the bottom of the stack?
These loss mits are human and I definitely think their emotions play a role in how they handle your file though not the exact decisions made by the investor.
There were more than a few times that I felt like I got a no from a frustrated loss mit who probably never really even asked the investor. I have a very sweet kind of manner that leads to that kind of stuff. :-)
Real Estate Investor · Portage, MI · Member since 2010 · 470 posts · 315 votes
15y
Originally posted by Matt Whiteside:
The wanted me to take out the addendum "Offer contingent on Buyer wholesaling this property if the existing mortgage holder agrees to accepting a discounted payoff. Seller has been made aware and fully understands that buyer may sell this contingent interest at a higher price."
Were you planning on back to back closings or assigning your interest in the offer to purchase? If the latter, that may be your problem. Or it may be the fact that your offer is contingent on finding another buyer at a higher price. Without knowing your documents it is hard to know, but whatever you do, keep full disclosure.
Rehabber · Tucson, AZ · Member since 2008 · 1k+ posts · 802 votes
15y
Matt-
I am with Bill, your disclosure, in my opinion, is too succinct and you're really forcing them to decline your offer. Servicer's have fiduciary responsibility to the investor and when you virtually say, you must agree to sell to me at lower price so I can resell to another party without any risk to me, they are going to be put on the defensive. In reality acceptance of your offer means they are not getting the highest net proceeds possible for their client.
My advice to you would be, at the very least, to remove the assignment part and the contingent part just as Bill has suggested.
Disclosure can more vague and still have the same protections. I personally recommend "buyer intends to resell subject property for a profit". I also recommend putting it in the purchase contract rather than as an addendum.
BTW, I have not had much luck with HSBC as a first mortgage. They are known to take a hard stance against investors and they usually will not pay 6% comissions.
Eric-
I agree that some loss mit reps do get emotional at times and this certainly can have an impact. I rarely get emotional because I find they are in a better position to negatively affect my business than I am are able to affect theirs.
As investors we are always trying to get the upperhand and this can make them look bad. So it is always best to get along with them even if that means swallowing your pride and kissing a little butt.
Although it does play a role, in my experience, it is not that significant in the vast majority of deals.
New here and just about to fill out my profile. I have done about 20 transactions with banks, in an effort to disclose but not give away all my business plans with the bank.. I agree with Scott Hubbards disclosure statement, "buyer intends to resell subject property for a profit". I do change it a bit..to read " Buyer may elect to sell/assign the property". The trap I fell into early on was that the bank had to approve my sale, profit and intentions. We do not have to get our margins approved by the seller and we do not have to tell them we are going to profit from this purchase.