All Forum Posts by: Marco Bario

As for the loan minimum, Shannon Ross @ Delmar Mortgage, but you'll have to ask about the seasoning. 

https://delmarmortgage.com/

@Sandra Hughes

There's no need to reinvent that wheel. Search for Fannie Mae form 1003.

@Mackenzie Page - Congratulations on finding a (potential) opportunity. Nice work.

With such a small balance existing loan, I like a seller-financed wrap in this instance:

1. Seller sells to you

2. Seller carries back whatever amount remains after the down payment

3. The existing loan remains in place 

4. You make note payments to the seller each month

5. From each payment the seller receives, he/she makes a payment to the underlying lender (the pre-existing loan) and pockets the remainder.

These are called wrap mortgages, wraparound mortgages, or all-inclusive trust deeds (AITD). 

As opposed to subject-to where you'd be responsible for making loan payments to the seller's lender each month, they retain that responsibility and, therefore, that safety and control. 

If you mentioned hard money because you may need additional capital for repairs, they would want to be in first position and the above scenario, unfortunately, won't work. Do you own other assets to secure a renovation loan against? 

@Alana Reynolds -

I'd recommend this when dealing with any seller, but especially because it's your Grandmother - understand what she needs. 

Where is she living now, and what are her living expenses? Is she struggling to meet expenses? If so, how how much is needed to up the difference?

If you're comfortable sharing more details here, I'd be happy to suggest a structure. Otherwise, feel free to reach out privately. 

@Don Konipol gave you a good answer. I’ll add that if one were to use a servicer with such a low payment, the servicing fee would eat quite a bit of each payment. 
Normally I do as Don said and price based on the yield I need when considering the risk. But in this case my model would be different. I’d be more concerned with equity. I don’t think I’d pay more than $2,500 for the loan - and only because the credit score is strong. 
Another method is to buy the payments but not the balloon (a partial) which I’d still do at a discount but not as steep. 

@Anthony Cross

Even in junior position, the IRS has 120 days for redemption. They will only do so if they determine the amount paid at foreclosure was substantially less than fair market value. 

As @Ned Carey mentioned, there is a procedure to request they release their redemption right. 

@Donyelle Keith -

You're correct about needing the LPOA / authorization from their borrower.

Since he hates landlording, another option would be to offer to master lease the property with an option to purchase. The master lease agreement would grant you the ability to sub-lease. It sounds like some rehab or at least maintenance is necessary. Either the master lease or the option could allow that any money you spend to get the property ready to rent may be credited toward funds he'd receive. 

I'm not sure why he wouldn't have the lender's contact info. They've certainly been sending statements and late notices - not to mention the notice of default and other legally required foreclosure documents. 

If he's willing to let it go in foreclosure, maybe that's because there's no equity. 

You need to ask to see a recent document showing what he owes including fees, and also determine if it's not too late to reinstate. You also need to search title for additional liens, plus determine what's owed for property tax and any other assessments such as sewer, etc.

If you determine there's a deal to pursue, you could, 

• Offer to purchase subject-to. But you'd need the option to reinstate and a clear understanding regarding taxes and other liens.

• Offer to buy an option to purchase at a later time. You should use a closing agent to be sure your funds are used to reinstate and bring any other delinquent obligations that could attach to the title current. 

• Make a short sale offer. His lender will need to approve. If they don't want the property and there's little equity, this might be appealing to them. 

Start by asking what they’re going to do with the money. If it’s going to sit in an account earning less than 1%, or go into the stock market I’m sure you can pay them a rate that they’d like better than bank rates or stock market uncertainty. 

Also if they’re going to need to pay capital gains on the sale proceeds, offer that an installment sale would defer and possibly reduce their tax burden. 

@Kyle Aho -

I think I understand what you're trying to do, although the terms you use might be backward.

This is a land contract, which means:

• The "owner" is receiving payments, not making them. They still hold title to the property.
• The "buyer" is making payments. They DO NOT hold title to the property. 

I think you're saying you'd like to make a deal with the buyer to purchase the property, however, because they don't have title, it's not the buyer's property to sell.

In that instance, what you could do is offer a four-year lease during which time you make payments that would cover their payments to the owner, and an option to purchase. A portion of each payment could reduce the option strike price. This scenario seems to give the buyer what they want, and unless the land contract forbids subleasing, it works well with the existing land contract in place.

If and when you exercise the option, the buyer (who will actually be the owner at that time) still prefers an installment sale for tax purposes, that can be done. Another bonus - the lease payments they'd receive prior are taxed at a lower rate than interest.