All Forum Posts by: Thos. A.

My goal is to buy it as cheaply as possible, then fix and flip, or possibly just flip. The other houses I've shorted have been bought at 30-50% of loan balance, though I've ended up keeping most of them as rentals. All homeowner hardship info has been submitted, and now I just need to work with Loss Mit at the bank to get the deal I need.

Though bank has probably sent field services by to check occupancy, etc. they don't generally even think about value until after the SS pkg is submitted, then they order BPO. Since I control the owners and access, I control the BPO (agent can't get it without me). I think, though, my SS listing agent isn't as "in my pocket" as I thought. I dropped this listing in her lap, explained that I would be shorting the house and needed it listed, arranged the meeting with owners, and she still put together a pretty flattering listing when all I needed was the basics. I let her choose a price almost at the debt--$260k--but the house is a mess and shows terribly, so I'm hoping it doesn't attract much attention.

I'm a non-agent investor, my previous pre-FC short sales all were listed before or during the process, bu this one isn't. Bank (Wells Fargo) needs listing ag. as part of SS package. Debt is $255k, I'll offer half of that. Home still occupied, but owners as well as agent are cooperating well, Bank says they won't do a BPO till they get the offer, which includes MLS listing agreement.

Since it's pre-FC and not REO, bank doesn't have a price in mind from what I can tell. Agent wants to know what price it should be listed at...the debt? Something less? Agent's best guess after looking at comps? Obviously I don't want it too low, may attract distracting other offers. Is the important thing for the bank just to see that it's listed, or do they closely scrutinize the listing price for signs of irregularities?

My state has a 6 month owner redemption period after the sheriff's sale. After that the second lienholder can redeem, but only has 7 days to do so. Is it advisable to buy, at sheriff's sale, a smaller first when the larger second is held by the same local bank? It's a great deal if I can buy the first and the 2nd is wiped out, but will they let that happen? I'd like to hear about specific cases of this situation, thanks.

Be aware that any liens, lesser mortgages, judgments, etc. that encumbered property before will STILL encumber property if you buy/get redemption rights and the redeem the property. So do a thorough title search before committing. In some cases this doesn't change the deal, but it can create some problems.

Jack Bosch is yet another guru doing the piggyback trick, where he gets other gurus to interview him--and vice versa--to mutually promote their products. It's a valid strategy to buy tax-delinquent land, though be sure to ask if the profit is worth the fuss, esp. for small parcels.

More importantly, be sure that the seller doesn't have judgments or liens from this OR ANOTHER property or situation in his/ her life that might make the title uninsurable. If you buy a lot, sell it for a profit, and a subsequent buyer may have a claim against you later for encumbrances on the title. A good way around this is to sell with a Quit Claim Deed, but most savvy buyers won't accept that if they have serious plans for the property.

Before you get ahead of yourself, you'll need some more groundwork. The fact that it's in a Land Trust suggests investors are already involved. You need to sort out the title issue before you proceed. Tell your seller you'll probably be able to buy it, but you need a few more details, and need to see the Trust, or at least find out who the Trustee is. The latest Deed will be in the courthouse, and its image may be on your county's website. Once you find the Trustee, that's who you'll be dealing with. If it's dead Grandpa, you'll need to see the Trust doc to find out how the successor Trustee is chosen.
S/he may be designated by the beneficiaries to the Trust.

You'll also need to find a title company that can do an "O & E" report (Ownership & Encumbrance) or whatever a basic title report is called in Illinois. It may cost $100 or so. Make sure there is only one mortgage, and that there aren't other liens that may have to be paid off. If there are, now you know, and can proceed accordingly.

Unless you know an investor you absolutely trust not to try to "steal" your deal--or feel like your luck is good--you may wish to get at Purchase Agreement spelling out the price ("balance of mortgage") and terms, ("subject to existing mortgage") but make sure to give the Trustee at least $10 as earnest to bind the deal.

Once you have that, you can file an "Affidavit Regarding Real Estate" at the courthouse announcing to the world that you have a deal pending. This will cloud the title and block anyone else from buying it. Don't do this until you're sure you plan to proceed, and you may need a good RE atty. or fellow investor to accomplish this.

You may be able to buy it by being appointed as the Successor Trustee, or by becoming a/the beneficiary using a document called "Assignment of Beneficial Interest of a Land Trust."

This deal sounds like gold, though, all the more so if you can buy it sub2 AND be able to offer it sub2 to another investor. A savvy investor will recognize the value of paying,say, $50k for the right to take over $93k of payments on a $300k property. Once you're on title, you could also just try to retail it, get a Realtor, choose a good sell-it-fast price, and away you go!

This isn't a precise road map--I've done sub2s but don't use Trusts myself--but it should help to point you in the right direction. If it sounds difficult, well, consider if it was easy someone else would have plucked this rose of a deal already. Good luck!

I didn't lie or deceive, I told her the truth. I run a mgmt company, and we were making the payments. There was nothing to be gained by trying to explain how I'd gone on title via sub2. She didn't ask, and I didn't offer it, why should I?

Remember, no law was broken. Somewhere buried is the fine print of the loan is a DOS clause, which is a civil matter at most. If they want to draw the conclusion that the property "sold"--which I think the loan officer did anyway--they could call the loan due. Bottom line is my seller got her new loan, and the loan in her name that I'm paying on is current. as it has been since I took it over 2+ years ago. Do you really think the lender is upset that their loan that was on the brink of foreclosure back then is performing now?

If I buy a second mortgage at auction, must the lender holding the first (same bank as the second) let me reinstate and take over payments on the first? I've heard this is true but don't know for sure. If so, can you provide precedents, links, references? Thank you.

Though they kinda make sense, I never got aroung to using Land Trusts, too much hassle, LLCs are easier, This biz takes enough time as it is. Lenders aren't worried about DOS these days. And Land Trusts can raise red flags when your final buyer goes to refi, esp. if the title's not seasoned, I have done many sub2 deals, the only notice I've ever gotten from a lender was that, since someone who's not on the mortgage is making the payment, I may not be entitled to the interest deduction. I even had a seller with a BOA loan I took sub2 get [i]another[/I] BOA loan a year later after I explained that a "mgmt company" was making her payments on her behalf and though it remained on her credit, it didn't affect her DTI at all.