Advice needed on analyzing a foreclose deal in helping a friend out of bad credit.

[Randy Fung]

Dear BP,

I am at novice investor. I would need some advices on this case.

I need some advices on analyzing whether I can help a friend out of bad credit for foreclosing a home in Albuquerque, new Mexico.

She has defaulted payments for couple years (1999 days). Here is the #

Original loan: $132,000.

Original rate: 7.5% adjustable cap at 13 %.

Monthly payment: $925

Amount owned stsince default: $80,000

Current Loan + default amount = $189,000

Current status; in Foreclose, Bank said we can send in offer for short sale.

Current Zillow est. property value: $140,000

Est. Rent value: $1,100

Questions:

• 1.Is it too late to help her out of bad credit if I acquired the property?
• 2.Is it worth it to acquire this property? If so, what will be the offer value to the bank (short sale value)?
• 3.Any one specialized in short sale in Albuquerque , New Mexico? Please advice.

• Every one, Your advice is much appreciated.

• Thank you.
• Randy

[Steve Vaughan]

@Randy Fung you are quite a friend!  Her credit is toast.  Only time will heal that.  A short sale will help her in a huge way, as long as she isn't sued for the deficit balance. A short sale without re-course is the best that can happen for her.

I wouldn't buy and re-rent to her, either. You may be the one without rent for 1999 days. How many years is that? Has she saved that money that would have gone to the mortgage? Should be $80k in her bank acct! You are kind. Kindness in this business (it is a business) can lead to huge financial losses. I would only buy her house as a short sale if 1) there is value for me (you pay less than FMV of $140k, 2) there isn't recourse on her from the bank, and 3) she moves. All those things happen and I would do it if I had the means. Good luck!