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Purchase loan, recouse. non-recorse questions..

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing Purchase loan, recouse. non-recorse questions..

This topic contains 3 replies, has 0 voices, and was last updated by Avatar of rrhart rrhart 11 years, 3 months ago.

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  • #4532
    Avatar of rrhart
    rrhart
    Member

    As I get input on my post about Being a motavated seller,
    I’ve got some coments about being able to give the house to the lender
    as full payment of the loan was a purchase loan and not a refi.
    They stated that the house is full colatteral for the loan.

    We have a 1st and a 2nd, it is not owner occupied.

    Can anyone give input on this?
    How do you find this info in the Loan Docs?

    Thanks,
    Ron

    #24774
    Avatar of bill_gatten
    bill_gatten
    Participant

    Your first is a non-recourse loan and your second is not. The 2nd can come after you for a deficiency judment once the house is sold…assuming he is the one who forcloses, services the first and sells the house.

    Bill

    #24775
    Avatar of rrhart
    rrhart
    Member

    Can you give any creative ideas on an exit strategy
    or even a holding plan that would handle the negative cash flow?

    Details:

    The loan was a owner occupied loan. They did not occupy.
    The loan is now a little over 2 years old.

    With that being said, can the property be given to the loan company as
    complete compensation for the loan with no capitol loss that is taxable?

    What are the chance of the 2nd filing a judgment?
    If they do, my son does not have the money to repay.

    I was told to ask for a “Deed in lue of foreclosure” from the loan company.
    Is that true and how do you go about doing that process?

    If that is accepted what happens to the 2nd.?

    ===========================

    Land Trust options.

    How do you make a proposal to handle the negative equity and negative cash flow?

    My son can’t swing the neg. cash flow.

    #24776
    Avatar of bill_gatten
    bill_gatten
    Participant

    Whatver you do, be ready for the second to do whatever it needs to to protect its interests. Before it can come after your son, it will have to foreclose and bring the first current and service it, then sell the house. If the house doesn’t sell for enough to satisfy them, then they will probably sue for the deficiency balance (I sure would).

    Best idea might be to talk to the second now, man-to-man, eyeball-to-eyeball, and see what kind of concession they will make in order for them to keep getting someor all of their payments. Maybe they’ll sell out to an investor for pennies on the dollar. You don’t know untill you ask and make an offer.

    Bill

    #24777
    Avatar of rrhart
    rrhart
    Member

    WE just got some input from 1 attorney that said that because the 2nd was taken out as part of the purchase process it is also purchase money and no-recourse.

    It that true.

    The house was purchased as owner occupied then turned into a rental.

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