All Forum Posts by: James Harkness

As an asset manager, when a property in my queue is foreclosed upon, it is removed from my queue and goes to the REO department. I unfortunately cannot shed any light on how they go about listing the properties because I have no experience with it. Sorry I could not be of more help.

Disposition value is the value that the bank thinks that they can definitely sell it at given the amount of time that their business model allows for an REO to remain on the books or on the market.

It can't hurt to try. If you arent willing to pay more than 51k for it, then it isn't a deal to you at 58k, so you might as well make a lower offer.

From the bank's perspective, it really depends on the disposition value of the property. If the 58k value is closer to market value, they may consider a lower number. However, if the approval is priced at disposition value, it is unlikely that they will accept much less, as they think they will be able to make more profits in marketing it as an REO.

Tax returns are very deceiving and don't really mean too much. The only thing you can really see from these figures is that average rents are around $415 per door per month. Always back out depreciation. If depreciation is 6k and the rental loss is 6k, there really was no actual loss. Part of the benefit of having a rental property is the tax advantages that come along with it. In this situation, the "rental loss" means that the person is taxed on 6k less of their income than if they didn't own the property.

If he can make the payments but chooses not to, that will show in his financials. He will have to get full financials to the bank in order to get a short sale considered.

What if he owes what the house is worth? Not upside down, but no equity.

For a short sale my bank requires a written hardship letter explaining the financial hardship and asking for assistance. We also require the 2 most current years of tax returns, 3 most current months bank statements for all bank accounts, business and personal. We also require a profit and loss statement for the current year if the customer owns a business, and a rent roll if there is more than one unit. Additionally, we require a personal financial statement where the customer shows what they are bringing in each month versus where their money goes, down to gas for auto and groceries.

Hope this helps.

I agree with Jon that loan modification companies are scams. A short sale is a different beast, and should be looked at as such.

An example of a modification company "scam":

Customer authorized me to speak with a lawyer who was going to do the loan mod for him. I called him every day for a month without him getting back to me or forwarding me any paperwork. The mod was pushed to another month causing additional legal fees, delinquent interest, and late charges to acrue on the account. I finally get the financials, but the lawyer will not return my calls or answer emails with questions that were pertinent to getting the deal done. I simply put together the best deal I could based on the hardship and the financials. I proposed to my management to reduce the interest rate to 4.5% (commercial loan). Management deemed that there was too much equity in the property (48% LTV) and said that the best we could do is 6.5% or we will foreclose on the property.

I relayed this information to the lawyer, who for the first time in this process called me back. He told me that unless I can do better, his client is going to tie the property up in bankruptcy for as long as possible and not pay me. I told him that was fine. He hung up the phone on me.

2 minutes later, the customer called me and told me that he does want to keep the property and does not want to go into bankruptcy. I told him that if he would work with me, and I could substantiate a lower interest rate, I would be happy to try. No guarantees, but I would try to get an approval. He said he would appreciate that.

I am working directly with the customer now. The lawyer called me yesterday and asked if I had completed a modification. I told him to speak with his client. He asked me why, stating that I had authorization to speak with him. I told him that since he misrepresented his client to me, I did not feel comfortable speaking with him any further about the customer's loan, unless I received further authorization from the customer to do so.

He got mad and hung up the phone on me. All he wanted was to get paid. Never had the customer's best interest in mind.

Tyler,

If the property is under water, then she owes more than what it is worth. How has she decided to "let her house go"? It seems to me as though if she wanted to get out from under the mortgage, she would have to do a short sale. She would need to get in touch with her mortgage company and talk to an asset manager about whether or not they would consider doing a short sale. That would be the first step.

Supposing that a short sale is a possibility, you would then have to make an offer on the property and have it accepted. You would need to do a double close, and use transactional funding, because the bank will most likely not allow you to use a wholesale contract. They are going to look at you trying to take a cut of the money, and not allow it since there would be deficiency debt.

Without knowing the details of each of the properties, it is dificult to discuss strategy and whether there are deals here or not. Preforeclosure would get me thinking about short sales though. They can be very cumbersome and time consuming for a newbie.