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Update to "We're stuck" + new twist - http://www.dealmakerscafe.com Forums

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Megan

"Update to "We're stuck" + new twist" , Wed 4 Oct 18:46

It's education time for me. New twist on the previous refinancing problem we posted about a few days ago (re. We're stuck on this one).

We were trying to figure out how to create equity via owner financing on an upside-down house we had been looking at. As mentioned, we received a Bronchick newsletter that suggested buying out the second at a discount vs. their experiencing total loss in foreclosure. Sounded good, so I did some more research and reached a new roadblock: they actually have a third consolidated which bought out the first two, hence the equivalent twice monthly payments.

This brings me to new ground. This couple's only option if they can't find a buyer pronto is foreclosure. They are prepared for this and intend only to put a FSBO sign in the yard and forget about it after they move this weekend. I'm possibly putting too much thought into this, but I'd like to help them. Would offering to buy out the consolidated from the company at a discount be an option? I know nothing of this, but thought about it since I was already considering buying out the smaller second at a discount in order to take subject-to first.

It just seems like when faced with a couple who are willing to throw it all away, that there must be a way to fit myself in there and satisfy everyone: they don't lose credit, bank doesn't lose total profit, and I create equity and profit. They figure I am their last chance, which I can't help but agree to.

We are in this to create solutions, so where is that solution in this mess? Any suggestions or experience with buying defaulted paper? I'd love to hear them. I have no idea how to approach this and will obviously have to walk if I can't figure it out soon. I don't intend to leave them hanging on a hope for much longer.

Thanks,
Megan

Replies:

lynnhahn

"Re(1):Update to" , Wed 4 Oct 22:28

Well, isn't this one getting interesting???

Buying the paper really isn't that complicated. You need to contact the mortgage holder and simply explain the situation. Ask them if they prefer to have the house back or if they would consider selling the note to you.

If you buy the note you will need the cash to buy it, or a source of financing. It's unlikely that you can negotiate flexible terms when buying a note.

Unless the mortgage holder wants the property (a possibility)Another option may be to negotiate payment plans with the mortgage holder. Explain to them how you do business and how you can turn their non-performing note back into a performing note, and that you will cash them out when your tenant/buyer gets financing. The catch for them is that they must allow you to start making regular monthly payments without having to catch up all of the back payments.

Remember: You can't help everyone! Sometimes it just doesn't make sense.

Good Luck!
Lynn

Those who say it can't be done are usually interrupted by others doing it!