All Forum Posts by: Cara Lonsdale

 Hey Jay!  Good insight as always my friend.

In AZ, a Seller has all the way up to the auction to redeem, file BK, or make arrangements with bank for a loan modification.  California is a consumer state, so my guess is that the rules/laws are as liberal as they get in favor of the owner.

As you stated, the lender doesn't HAVE to do anything, but I would think it'd be worth a call to the lender to discuss loan modification and/or document the process by going online and completing their form.  Most banks have a link near your loan account info.

But I agree with you Jay, if all else fails, let it go, sit back and wait for the overage check, and move on.

I think it would be dangerous to go under the 50% rule. As many people have stated, the 50% rule accounts for repairs and unanticipated expenses, not just regular monthly expenses like utilities, insurance, and HOA.

One way to push back with the Realtor, would be to ask them what expenses were allocated for repairs this year, and what repairs were completed.  If she says none, then ask her what type of deferred maintenance does the property have.  We all know that a property can't chug along for over a year without SOMETHING needing repair, and when you don't keep up with those items, they stockpile for the new owner.  You don't want to be stuck holding THAT bag.

The Realtor is doing her best to sell the property, that is her job, so you can't fault her.  However, you either need actuals that you can plug into your analyzer to evaluate, or you can create a proforma, but it has to include the 50% rule to protect you.

AirBNB actually offers this as an option.  If you want to be a host, but do not own anything, you can still do that and make money.

Homeowners who don't want to have hosting duties can offer their unit(s), and a Host can opt to take it on.

It is a great matchmaking opportunity for homeowners who have units, but don't want to do the work, and for a Host who doesn't mind the work, but doesn't have the inventory to both profit.

Anyway, I just thought I would throw that out there since there is a legal, and inviting way to do what you are talking about without getting in trouble with a landlord OR take on any added leasing debt liability.

I just received this new marketing piece that is being distributed for a new loan program.  I thought it would be something that the BP community may find useful as it directly relates to rehabbers.

Has anyone else come across a program like this that will do 100% financing for a rehab project including the rehab expenses?  I thought this was incredible, and I wanted to see if anyone else had experience using a program like this.  I would love to get any feedback from that experience.

 I think you're right, Tom.  

The question was how can he save his home because he doesn't want to leave or sell.  I was speaking to that.  I mentioned that a BK would definitely buy time, but then would limit options for any kind of lender conversation.  I understand he has no income, but if that were to change, and he provided a LOX (Letter of Explanation), you would be surprised what lenders can forgive, especially when there is SO much equity in the property, and it's an owner occ.  A loan modification would be an option at that point.  However, his options will lessen with a BK because the lenders can't apply conventional guidelines to the loan until the BK has at least a 2 year seasoning.

BTW, the call to the lender to request a loan modification will most likely also delay any foreclosure action as it really is NOT the lender's goal to obtain the house.  They want their money.  If the Seller shows signs of having the same desire, they will give him the time to work it out.

My main point is that communication with the existing lender is vital asap.  In the absence of that, the lender will continue as they don't know the Seller's intentions.

In the end, if the Seller sits on his hands, does nothing to save his home, then BK is the only option for delaying the inevitable, but it won't solve his problem, and he will lose his home in the end anyway.

Ahhhh.....if you haven't signed the contract as the Seller, then you DO NOT have an executed contract.  What have you said or given the Buyer to indicate that you have accepted their offer?

I would be VERY careful about how you proceed, especially as it pertains to the Buyer moving forward with the assumption that you have a deal.  Once they start spending time and money on inspections and so forth, you will have one angry Buyer on your hands if you pull out (even if you have the right to).

I don't know how your contracts read in Maryland, but in AZ, the time frames for the contract don't start until you have a fully executed contract (Both Buyer and Seller have signed).  So, their inspection period would not start until you have both signed the contract, and have agreed to terms.

If you have verbally accepted, again, be VERY careful as the Buyer may have recourse on their understanding of your acceptance...especially if it is in writing (say an email or text).

I would contact the Buyer asap and communicate.  The Buyer should want a clear and 'cleaned up' contract as well.  So, it is to your mutual benefit to communicate and get it worked out, and start on the right foot.

 So true!  It is so important to do your due diligence and make sure that the rental rates will fly in the market you are trying to make a deal for. 

For people without access to MLS comps in the area, there are some other resources to check out. Zillow actually does rental comps as well as sales comps, but as users of Zillow know, you can only use this as guide, and not as the sole resource as they can be off the target in many ways. Another good resource is rentometer.com. They let you do a dozen or so before they want to start charging you a nominal fee. You should at least be able to research several properties before you have to make a choice to pay, or not. (I am not associated with rentometer in any way).

Start eviction proceedings immediately.  This usually starts with a 5 day pay or quit (I say usually, because I don't know if it's different where you are located.  I am in AZ, and that is how it starts here).

You have to send the 5 day notice certified mail.  I also send it via regular mail so I know they get the message even if they refuse service.

Then, after the 5 days, you go to the courthouse and file for eviction.  This is usually a 3 week process as the court gives the tenant an opportunity to respond to your complaint, before setting a court date.

If it is for nonpayment, the judge should make a swift decision as there really is no answer to defend nonpayment.

Best of luck to you.

I charge $25 per day.  However, we had a similar situation when we got one of these ridiculous judges as one of our eviction cases not too long ago.  He wasn't so much concerned with the $25 per day, but when it was beyond 20% of the rental rate, he said it was excessive, and limited it to the 20%.  Better than nothing, but still ridiculous.

It sounds like you got a bad judge.  

One suggestion is to spread out fees instead of lumping them in as a late fee (another tip our judge gave us) including an administrative fee for processing the eviction notice or late notice, postage and handling fee for typing up and mailing the late notice (this is obviously small potatoes, but a few dollars here and there add up).  Mileage fee or service fee for driving over there to serve the tenant.  You get the idea...

 The most obvious problem he creates by filing BK is that he eliminates many lenders from being able to loan to him.  By narrowing that field of options, he may be buying time, but to what avail?  If he isn't able to refi, then what does he have?  Most lenders have a 2 year minimum seasoning on BKs.

Honestly, IMO, his best bet is to contact the lender (NOT the servicer, but the LENDER), and throw himself at their mercy for a loan modification.  If he has the kind of equity he states, they shouldn't have an issue with doing this, and placing the amount owed onto the principal, and perhaps spread the loan term out to reset at 30 years, or even going to 40, which would lower his monthly payment, and lessen his burden, which is what I am guessing got him in the trouble he is in now.