All Forum Posts by: Jason Green

#3 is the problem. I am the company. They were going to short it to my uncle for 195k and write off the rest. He has a tax lien so obviously they won't loan him the money. If I just give it back then they will foreclose and not sure what will happen to him. My credit score is the least of my concern. The option they posed to me was hold a mortgage for my uncle that way I am at least reducing principal but it would be 10 years or more before I was right side up. My point with the arms length transaction is that I don't think they can short sell to me something that I already own. I guess since they are doing it completely in house they could do a principal reduction.

I am a builder and I have one house left in inventory. I have been paying the construction note for 3 years. My uncle is now renting the house but due to a tax lien, the plan of him buying in a short sale has fallen through. The bank is willing to do in the words of the banker, "whatever it takes to not get the house back". I can get a mortgage no problem for what is owed and just rent it to my uncle who is a very solid tenant. The problem is, I owe 227k and its only worth about 195k. From my understanding, the bank cant short sell it to me because in the words of my lawyer, its not an "arms length transaction". I would gladly take 195k mortgage and rent it to him until its paid off but I have no interest in the house at what I owe. Any suggestions?

Joel,

I am by no stretch a financial guru but I pulled the FDIC statement they filed about 3 weeks ago. Looks like total assets of 110mil and liabilities of 100mil. If I am reading this right, they have about 1900 1-4 family construction mortgages. They have two branches. They keep saying "they" wont let us do a loan at less than 6% but its a private bank...who is "THEY". In my business I can do whatever whenever if it makes a deal. I think I need to show them the writing on the wall. I have pumped 60k their way in interest and its time for them to work with me or they can have another house.

Thanks for all the comments:

Fantasm, I have little to no intention of building being my source of income for the next 5-10 years if ever again so that is not important to me.

One thing I failed to mention is the loan is INTEREST ONLY. No way I would ruin my credit for 250 bucks a month that would be stupid. This is a very small local bank probably less than 10 mil in assets. They do not want another house to sell because they cant sell the one next door to mine. I am in a great negotiating position and will take whatever deal I can that is feasible without defaulting. Being a small bank they will do an in house mortgage for 25 years at around 6% fixed. If I take that option, my payment will be around 1300 plus it will take around 7 years to break even. Is it worth it to me to pay taxes and insurance for 7 years plus kick in around 200 a month? That is really the question. Is my credit worth saving and having this house around my neck for the next 7 years?

Jon,

I have no assets in my name other than a paid for vehicle which if they want it then they are welcome to it. I am not sure about the recourse questions, I signed a personal guarantee but I dont have anything for them to take so not worried about it. I dont want to do option 5 or 7 because it makes no sense to throw anymore money at it at my age. I just got married and her (our) house is paid for. We have no debt together and my residence although paid for, has never been in my name. I just dont see a whole lot of sense in diapering this thing any longer. I dont know why the bank would be motivated not to take a short sale when they are 100% aware of the enivronment out there. Either they can foreclose and sell it or they cant short sell and net the same thing with way less work. Of the options you suggested, option 6 is possible because I can easily make the loan payment, just not sure going in the hole another 20-30k at this stage in my life makes sense.

Ok here is the rundown. I am a builder and I have one unsold property from the market tanking. I have a construction loan from 2007 that every 6 months the bank willingly renews at 6% interest. I have not been late or missed a payment in 4 years. I have payed a total of around 60k in interest to the bank. So here are the numbers below.

LOAN: 222,000
VALUE: 180K

It will be 10 years, if ever before the market recovers enough to even come close to the loan amount. I have a solid on time renter for the past year who covers all but $250 of the loan payment. It is pointless for me to keep booting in $250 a month plus taxes and insurance for a house that will never be worth what I owe. I am 29 so I can recover from the credit hit but at my age, there is really no sense in digging myself a huge hole.

The options I am willing to do:

1.) I will list it and whatever it brings is what you get a check for and I walk away with no obligation.

2.) Here are your keys and I will see you in court.

3.) Deed in lieu of foreclosure.

4.) I will take a mortgage for 180k in house for 6% interest and the bank makes interest every month and doesnt get another house in inventory.

Wanted opinions from bankers/investors/whomever about the options above. I really want option 4 because it seems to be the most painless. Thanks in advance for the advice. Local bank btw...3 branches total. Excellent history with this bank and they have owned the house next door to mine for 3 years so they are not strangers to reality.

Total bank assets are 146 bil. They have been selling distressed property about 30% below asking price. I think our biggest asset is the fact that we have the cash to complete the project. Anyone who can come up with say 900k purchase price that's great...they still got to come up with enough to at least go to 48 units (2 more buildings) to make it make sense. Taxes are very low in my area and these are new so maintenance issues should be few and far between.

Financing on the purchase is no problem and we are liquid enough to cash flow the construction of 2 buildings at a time. Plan is to divide and sell the commercial asap. Just got word the bank has 1.331 mil in it from courthouse purchase. Thanks for all the advice.

Joel,

It is in an extremely underserved area. No apartments within 15 miles other than a few duplexes. The cities on either side of this town where the project is located will not allow apartments in the city limits so the competition is basically non-existent. The company managing it said that the demand is high but there are no finishe units available for rent. Bank refuses to finish anymore units. I appreciate all the advice.

Ok guys here is the rundown.

(2) buildings of 12 units are built. 6 over 6 plan about 900 sf each unit. 2br 1ba all units are identical. Of the 24 units that are built 8 need carpet and cleanup to be move in ready.

The plans call for 192 total units on site plan.

12 of the available to rent are currently leased at $550/mo.

Includes 17 acres of commercial property worth about 10k an acre. Also includes 200 partially finished storage units.

This is a bank owned property that has been in the portfolio for about 2 years. Original asking price was 1.675 million. They dropped the price today to 1.1 mil. They are very motivated and we are thinking of an offer around 900k and we are confident they will take it. I am in the apartment construction business so building it out is no problem. I have never owned apartments and I need help with the costs associated with it other than the debt service. The deal will almost cash flow without building anymore units. I think it is a goldmine but my partner is very calculated and will want hard numbers. So any help or advice with what costs to figure when calculating whether it will cash flow will be very helpful.