Reinstating mortgage and taking over a Pre-foreclosure/short sal

[Rufus McLaren]

I am a broker in Ft Laud, Florida. I'm also an active investor. Florida is notorious for foreclosure scams and modification scams.

I was wondering, however, if any one has had any experience with approaching a distressed homeowner with the following proposal: If they don't want to do a shortsale, and they have little to no equity in the property, I would be willing to take over the deed and the mortgage. In essence, I would bring the mortgage current. Guarantee the payments, and use the property as a rental. Of course the potential rents have to exceed the mortgage, otherwise, the property would not make sense.

Here is my logic... Where I live in Fort Lauderdale, there are a lot homeowners that bought properties in 2004-2005 that are just now worth what they owe. In fact I have a client right now that is almost at break even, but does not want to bring money to the table, and does not have enough money to catch up the mortgage. So basically if they sell, they either have to short sale, or bring money to the table. I wanted to propose taking the property off their hands as follows: I'll bring the mortgage current, which will save their credit. I would take over the property and remaining payments for the remaining 17 years.

Here's my logic. Right no the owner is losing. The owner doesn't want to do a short sale, and there is no equity in the property. MY REAL INTEREST is in the 4.75% mortgage that has only 17 years left. Most of the payments at this point are toward principal. I could bring the property current for about $10k. The property will rent for about $1,350 and the total of the monthly payments are about $1,000.

It's clearly not a cash cow, but the equity is building rapidly because of the age of the mortgage.

Has anybody done this before? I want to fully disclose my intentions to the owner. It appears to be a win-win.

I welcome any help. Thanks.

[Sal Castaneda]

@Rufus McLaren I have been doing exactly this for just over 10 years! However my focus is on properties with equity. I negotiate an equity split after i reinstate the loan eliminating the foreclosure, help them transition with a portion of their profits up front, and pay them either cash upfront to walk or a percentage of the profit after I rehab the property. It is a win win! Most have already tried to find a way to remedy the foreclosure by working with the bank, tried Mofiication Gurus, explored bankruptcy, and even shortsales. Unless the bank offers an option this is usually the best way they can salvage the situation, their credit, , get a fresh start and the money to do it with!!!