What could be done with this?

[Terry N.A]

There's a seller who owes $56k on a property worth maybe $65k.

Foreclosure process already started on him, but the bank says no date set yet, so it's still a ways out.

The "seller" is $17k behind on payments (if the $17k were to be paid, his balance would be $39k). The "seller" wants to stay in the house, .....as the homeowner. He's hoping I'll give him $17k to clear everything up with the bank, and he'll pay me back over time with some interest since his wife went back to school to earn a degree to get a job. He's hoping she'll be working within a few months. This is all a very bad deal for me to give up that much money just for interest.

His choices according to the bank, are:

1) Contact Hardship Loans, which he's already done, and that fizzled.

2) Pay the entire $17k to catch things up to clear the slate

3) It's a Freddie Mac loan, so the bank said he could break that $17k up into 10 months payments, added ONTO his existing house payment. That means on top of his $900/mo. payment he currently cannot make, that's $1,600/mo. on TOP of that = $2,600/mo. for 10 months before it can get back down to $900/mo.

The only other thing I can think of, is if I would invest some money, for the option to purchase the home in the future, say 5 years out and we split the proceeds (so he keeps the house in good shape). In that time, hopefully the mortgage will be paid down, and the value goes up. But I wouldn't want to give $17k for that right.

What ideas are out there?

Thanks.

[Bill Gulley]

Welcome to BP, Terry.

This only has a 9K spread to it, getting in and selling it will take about 3K in closing costs, that leaves 6K to profit and you'd only get that from another buyer with no wiggle room.

Both are unemployed? They don't have the ability to pay if you did a deal today, they don't even qualify to rent it.

RE is full of sad stories, you can't run a charity and help everyone, after all, it was their doing in getting into that situation.

There is no justification to get involved in any way unless they can produce some evidence of the ability to pay. You could get stuck making payments and/or be in the same position as the lender and taking that risk for about a 5K profit.

They can't really stay there to make it a deal worth messing with.

As to a way of doing something, they could agree to the higher payment to make up the deficiency, you could buy it subject-to making the payment difference buying into the property. Then lease it back, but I don't know what your numbers would be with a sale-lease back. But, they will hit a wall if she doesn't get a job along with him, so I'd bet at some point you'd need to be where the bank is, removing them and selling it. You also run the risk of the lender calling the note due because they sold it Sub-To. You'd have to refinance your purchase. And all for 5K? I'd say you need to tell them sorry that you can't help and move on.

Now, if it's your brother-in-law, you could get involved but not as an investor.

BTW, I also suggest new folks stay away from dealing with folks in a foreclosure unless they can really buy the place, new laws make dealing with such folks even more risky by clogging up the foreclosure process. :)