Seller with HELOC only 4 years behind on payments

[Sergio Guzman]

Hello all!

I recently run through a special case and wanted to hear your opinion on the deal.

I found a property in which the owner only carries a HELOC with USBank. Owner hasn't made any payments on the loan for 4 years now. Loan balance is $80k. We recently called USBank and asked them what the deal was. They pretty much told me that he could continue to make the payments or they would settle for $40k withouth us even asking.

The ARV on the property is around $70k. Client wants $10k to get out of the deal. There is like $5k in repairs.

The deal works for me if I could buy the note somewhere around $30k.

Then the deal would look like this:
$30k (HELOC settlement)
$10k (seller)
$5k (repairs)
============
$45k total cost

My questions are:
a) Has anybody experience dealing with USBank?
b) Would they take $30k considering that there is no first mortgage?
c) What is the best way to approach the bank on selling the paper?

All comment and input is appreciated. Thanks in advance.

[Chris Kennedy]

The HELOC is considered a NPN. I believe the rules regarding NPN's are different than short sales. Investors/Private lenders can and will discount notes for various reasons. It is a possibility that the bank lost the original note.

Buy the note and then decide what you want to do. Buying the note, in a owner cooperative situation, IMO is the best option when the cost is the same.
* You could then do a short sale contract with you as the lender with 5k moving expense
* Implement a cash for keys contract (Deed in lieu)
* Use an option as payment
* Have a 3rd party overpay for something