All Forum Posts by: Sandy Peters

Anyone out there with experience of taking a property subject to after purchasing a junior note at a discount?

For example:
ARV : $400k
1st TD: $250k*
2nd TD: $150k

1st TD is in foreclosure.
Contact the bank of the 2nd Td and purchase for significant discount ($10k-$15k) since that note gets wiped clean at trustee sale. My understanding is that since you are simply purchasing the note at a discount and it is not in 1st position, you don't need permission from the homeowner.

Get property Subject to the first loan and cure the 1st TD. Homeowner is motivated to do this because they still owe $400k

I suppose technically this isn't a short sale but didn't really know where else to post this.

My questions are:
1. Is it still the loss mitigation department that you contact to purchase the note?
2. What kind of homework or paperwork do you do to make yourself more credible to the bank?
3. How do you approach the homeonwer?
4. what other things should I be aware of?

This is a great post Jay! Thanks for the the info.

I agree with Chris in that Obama makes it seem like these people will be homeless - out on the street or living in cars. The reality is that they'll be renting - and in Southern Cal they'll be renting a better place for 1/2 or less of what they were paying as homeowners. I'm not seeing what the problem is with that.

I also agree with Mitsu - any money should be spent getting banks staffed to work short sales and getting loans to people who can afford the homes sold in short sale. I've seen so many instances where the bank turns down a short sale at a good price only to take it back in foreclosure, sit on it for nine months and then put it on the market at 20% less than the amount of the short sale amount.

Short sales are a win win for all. The property is now owned by a legitimate buyer. The old homeowner doesn't have a foreclosure on their record. This saves the house from freefalling down an exta 20% due to foreclosure and the banks don't incur all the extra fees and carrying costs. It keeps the property from being vacant. Puts the homeowner in an affordable rental where they can start saving again and in a few years be able to buy a house at an affordable price.

I just don't get it.

I just attended a 1 1/2 hour spiel at the local library from this loan modification company called Home Loan Preservation(HLP). Having just heard Obama's "plan" I was curious to hear what they had to say. Anyone know of them or have any insight?

Here's the poop I got from the meeting. They recruit "consultants" to join their network and prequalify homeowners in need of loan modification. The consultant markets to find homeowners and once connected, inputs the homeowner's info into software HLP provides. Analysis is done real time to determine if the homeowner qualifies to move forward with a modification attempt and if so, the info is forwarded to a lawyer in the network. The lawyer will contact the homeowner and if they move forward with the modification the lawyer collects a $3000-$5000 up front fee (fee is higher for higher loan amounts) and handles the modification. Supposedly this does not violate foreclosure regs such as CA Civil code 1695 because a lawyer is handling the transaction and collecting the fee.

From that point all communication with the homeowner including any documents the homeowner provides is recorded on the site provided by HLP. They claim this provides all the transparency of all that was done for the homeowner should it ever come into question. In addition the homeowner can follow their status real time.

If the modification goes through the consultant collects $1000. There is an semi-MLM component which allows the consultant to recruit and train others and collect fees for those they've recruited.
If the modification doesn't go through the homeowner gets all of their money back (exception is if the homeowner isn't truthful with their info).

HLP was clear to say they are in the business of providing software that enables loan mods and not in the loan mod business.

The fee to become a business center (recruits agents) is $1000 and $249/month and to become an agent only is $69/mo. This of course is to pay for the maintenance of the software, online training, marketing, blah blah.

I asked why a homeowner would pay $3000-$5000 when a loan mod can be done for free and I got the answer I expected which was that they(well the lawyers) have such a high success rate and generally can negotiate a better deal than a homeowner could on their own.

I was also curious to find out what the "analysis" that qualified the homeowner consisted of but ran out of time. My suspicion is that if your temperature is at or near 98.6 degrees- you qualify.

Looking forward to hearing your comments.

I'm curious about the promised "Transparency" in all of this. Will these modifications somehow get recorded to show the new loan amounts and the goverment as partial beneficiary?

Talk about an incentive that will backfire. Why on earth would anyone who is overleveraged even attempt to stay current on their mortgage with a plan like this.

I would be forever grateful to any successful wholesaler who would be willing to talk to me for 15 minutes to clear up some of the detailed questions I have on wholesaling. I am in Southern Cal so a local person would be great but I am not picky. I'm looking for the answers to some detailed questions once the property is under contract. Some examples of my questions are:

I assume the very first step is to open escrow immediately? Any think specific to look for when choosing an escrow company?
What things does the wholesaler need to handle prior to being able to assign the deal? Inspection? Repair estimate? Insurance? Other?
Does the wholesaler show up at closing with hard money in case the deal falls through?

Thanks in advance for you help.