All Forum Posts by: Robert Carpenter

In the suburbs you get your own lot and you can usually set up a little garden like area to hang out in outside.  In the city you can get a townhouse but usually with little more than a tiny balcony.  What if you could split the difference, build at a density suitable for urban areas yet which still afforded you space for outdoor living ?  Thats the idea I explore in the following website, for any developers out there looking for another way :)

http://vachej.wix.com/archovizer

Thanks Jean and Richard.

In a PITI payment are all four portions normally paid as a lump sum to the mortgage company which then sends the accumulated insurance payments to the insurance company once a year and the accumulated tax payment in accordance with the county's billing period ? And if so what happens when the mortgage is paid off ? Shouldn't the mortgagor refund all prepaid property tax and insurance premiums to the homeowner on the day the mortgage is 'satisfied' ?

If she cosigns   it just means the bank can pursue her assets in the event of default. 

Christopher also with regard to your second deal if nothing else works I would try doing a deed in lieu of foreclosure.  If that gets accepted by the bank then I think you are automatically relieved from any deficiency clauses in the loan -  a topic I feel certain Dion is better qualified to speak about than me :) 

Christopher I think the idea is get the deed only when doing so allows you pick to up a good chunk of equity.  Now with both these way over-leveraged properties the reverse is true.  And of course getting the deed puts you on the hook for property taxes and  any liens that might be on the house and its   a good idea to have a title search done asap whenever you get a property under contract so there are no surprises when you go to close.  In any case the stronger position it seems to me is the lease option where you're not at any risk.    I think your best bet is the assignable lease option agreement in the case of severely over-leveraged houses.  

BTW, I see you are from Jacksonville.  Now that  happens to be the home of Ron Legrand, the godfather of real estate investing.  I think he has a local investment club in Jacksonville.  If I were you I would definitely make it a priority to try to get hooked up with them.  I think that would the best mentoring scenario one could ever hope to have. I think they get together weekly and go over deals just like yours all over the Jacksonville area.  

Something else Dion can probably answer as long as we're on the subject is whether a loan modification dings your credit and if so how much :)

Christopher it sounds like the loan is current.  Unless the loan is way in arrears I'm not sure the bank will even send you a 'short sale package'.  I think its got to first hit the loan mitigation department.  And I think a bank will only be interested in going ahead with a short sale IF you can show you have a strong cash buyer lined up.  Dion can probably speak to this better than me.  And of course a short sale will ding BOTH the husband and wife's credit.   If that is an issue with them why not just leave well enough alone if your renter is reliable ?

You might want to check the rentability of the house on rentometer.com.   If its pretty close to the $1,100 you're getting now then this might be a candidate for a lease option agreement.  You could lease option the house as is, accept all future repair costs, agreeing to make the $1,100 monthly payment with the strike price set  equal to the loan balance at the time you exercise the option.  You make this option agreement 'assignable' which means you can then sell the option agreement  to your present renter for a small fee.  The advantage to the tenant buyer is they get to live in the house during which time they can work to get their credit repaired.  Furthermore as they make payments each month the balance on the loan gets payed down while there is the likelihood that value of the house increases as the market recovers.   Eventually with improved credit, a reduced loan balance, and accrued equity as the market recovers the expectation is the  tenant buyer can get qualified for a loan sufficient to cash out your seller. 

[ In July 1973, Birdie, Dorothy, and Fred Mans purchased a property in Riverside California for the amount of $19,100 financed with Bank of America with a 30yr fixed rate of 8% (the going rate that month was 8.05%, and the annual rate that year was 8.04%). Secured by a Deed of Trust instrument containing the Due-on-Sale clause included. In July of 1975, Cynthia Wellenkamp purchased the property by assuming the balance of the loan at the 8%. In July 1975 the going interest rate was 8.89% for FHA. The prevailing interest rate from Bank of America would’ve been nearing 9.25%. The Deed was transferred and recorded into the name of Cynthia Wellenkamp on July 10th, 1975. It has been said that Wellenkamp made her July payment and Bank of America returned the payment citing it’s right to accelerate the loan and calling it due. The bank did offer to refinance the loan in her name at the 9.25% rate. Wellenkamp refused and so Bank of America filed a NOD (Notice of Default). ]

This was posted by Nick J in 2009 on BP.

Now it could not be clearer.  The Bank's SOLE CONCERN  was pulling out an extra point and a quarter on the loan.  Nothing about 'Asset Securitization'.  Nothing about title transfer causing a 'loan defect'.   Nothing even about the 'inherent risk' of a new property owner.  The Banks sole concern was pulling out an extra 12% on the loan. 

As well look at it from the other side of the coin.  Suppose an REI  does a sub2 wrap in which a new buyer is faithfully paying on a 5% loan and prevailing rates are 4%.  Who seriously expects the bank is going to call the loan due for the privilege of doing a re-fi producing TWENTY PERCENT LESS revenue ? 

In the early 1980s, with     interest rates on new loans at 18%, banks attempted to enforce due on sale clauses in older loans so that they could lend the funds out at higher interest, to paraphrase wikipedia. Now this could be termed the 'micro-economic' incentive for a bank to accelerate  a loan's repayment.

At the same time there is a 'macro-economic' incentive to call a loan due in a RISING real estate market or speculative  'bubble market' where interest rates might even by DECLINING.  By forcing  as many early loan repayments as  possible in a rising real estate market , banks are able to loan out a higher total volume of money per the same number of houses.  In this way, and as a macro effect, the banking industry as a whole stands to increase its total loan revenues.