All Forum Posts by: Ken DiPietro

As quoted from this article,

To all,

After checking with two real estate attorneys here in Maryland I find that a Subject To contract would likely put me on the wrong side of Maryland's Protection of Homeowners in Foreclosure Act.

If you are interested, I also posed this question to FreeAdvice.com (good resource, by the way) and the answer can be read .

Talk about the law of unintended consequences! :roll:

Thanks for your input. This is exactly why a second policy might be the smart way to go with the seller being contractually obligated to step out of the way should anything happen to the house which would require a claim.

The issue that I have not yet been able to resolve is how to protect myself in case the bank does execute the Due On Sale clause other than to already have financing in place.

However, the closing costs around here on a $50K loan have been quoted to me at upwards of $3,500. Throw in a housing inspection and an attorney and I'm approaching 10% of the sale price to get into the loan. Ouch.

Another method that was suggested was to use a hard money lender for 30 days while I process a Home Equity Loan - but I am unsure if that is going to be any more to my advantage.

I honestly do appreciate your help in this matter,

Ken

Jon,

Wow, thanks, I really appreciate the time you put into this message.

In order to maintain continuity, I opted for the in-line method.

I read elsewhere when I was trying to catch up that title companies can be used to do this as a service. Are you saying that they don't necessarily offer this service?

I ran across this suggestion elsewhere and I am assuming this is something that a RE attorney can put together for me.

Absolutely, insurance is a must. It wouldn't make sense to risk exposure like that for such a pittance. In my reading I have also picked up another tip to take out an additional insurance policy that covers the property while leaving the original policy in place, with the benefits for the original policy being directed to me, of course.

There are a couple of reasons that I would prefer to not go the conventional route. The first is that the area I live in is floating in real estate that relatively inexpensive. This created a problem where the FHA will not touch any mortgage under $80K. As I am looking at nice homes in the $50K to $65K range, FHA backed mortgages are out of the question. In addition to that, every mortgage officer I talk to seems to want to add an aggravation fee to these mortgages due to their size.

The other issue, one that is arguably able to be fixed, is that I am self-employed (forever) and my income has taken a hit over the last two years. While paying the mortgage on a $65K home is easy enough (I pay more than that on a rental currently) being able to have President Obama pay 10% of the cost of the home sounds good to me right now and the prices here are irresistible.

Again, thank you,

Ken

Your advice jives perfectly with my reading. Yes, it makes sense now.

Thanks again,

Ken

Justin and Ryan,

Thanks for the advice.

I certainly wouldn't be sending the mortgage payments to the ex-owners, that would be asking for it. I don't understand how get the property deed could get put in my name if the bank holds the deed until the final payoff.

I do understand that the bank has a right to ask for full payment when property they hold the note on is sold and I am guessing that the best way to make this deal go through is to make sure that the bank is unaware that any transaction has taken place.

With respect to an exit strategy, this would be a primary residence, even though if the technique works I might consider adding in a few investment properties as well.

I'll read up on the Subject To deal mechanism and see if I can't come back with a few more educated questions.

Again, thank you both,

Ken

To the experts here,

Perhaps asking for legal advice is inappropriate in this forum but if I could get an off-the-record opinion I would be deeply appreciative.

The scenario is this, if I were to locate a property owner who is in the process of being foreclosed on, offer pay off their overdue payments, take over their loan payments, and hand them some money to move with, am I opening myself up for any risk?

This arrangement would be made through an attorney and the title for the home would be held by the lawyer until such time as the loan was paid off when it would be deeded over to me.

The intent is to save the closing costs associated with a loan and hopefully pick up a loan where the bulk of my payment would be going towards the principal. This also means that this deal would be done privately without the lender's knowledge.

Thanks,

Ken

Joshua,

Really? I don't follow the California market but the state saw 100+% appreciation over a four or five year period? If so, that should have sent a pretty powerful message to everyone.

I read an article a while that discussed real estate pricing in San Diego. As I recall, the article stated that in 2005 the median income was $65K/year while median property prices had hit $550K. Allowing for a modicum of debt, this meant that only 1% of the population of San Diego could qualify for a mortgage based on traditional measurement. When a situation like that appears eventually something has to give.

Richard,

I fully agree with you. The tone used in the two articles was somewhat contradictory with the Fitch Report being more on the side of doom and gloom while the CNBC article paints the situation in a relatively positive light. An interesting side point is that there is apparently no issues with credit worthy customers getting funded, contrary to some of the reports being circulated.

Two predictions that I found interesting were included in the Fitch Report. The first being that California has already experienced a 40% average drop and is expected to see an additional 36% which is a dramatic correction no matter how one looks at it. Second, the Florida market, as Jeff Tumbarello has been highlighting, is nowhere near bottom yet with the economic devastation continuing.

I ran across , which reinforces what Jeff has been saying but it paints a pretty bleak picture of Lehigh Acres.

Certainly, one man's bad news can be another's windfall but when an area becomes as devastated as many areas have, one has to wonder where the Tipping Point is and if these locations can ever realistically recover.

Thanks for the response, I sincerely value your input.

U.S. home price forecast from Fitch Ratings.

Courtesy of

Housing Market Shows Signs Of Recovery: Regional Banks

Courtesy of