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someone wants to walk away and give me their home

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This topic contains 7 replies, has 0 voices, and was last updated by Avatar of amyhutton amyhutton 11 years ago.

Viewing 9 posts - 1 through 9 (of 9 total)
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  • #6332
    Avatar of amyhutton
    amyhutton
    Participant

    So, I have someone who wants to give me their house and walk away. They haven’t made a payment PITI in a year and a half. House needs new roof and the pool leaks, but the property is located in an older, but still prestigious community. They had a $350 an hr atty do a loan mod for them that turned out terribly. They are still living in the house but want to just walk away.

    So I put the house in a land trust, and hopefully have THEM pay the fees to get it started. Then I find an investor who wants to front the 3 Arch program money. We do the paperwork and get the ball rolling.

    Now assuming that the lender doesn’t foreclose while we’re trying this…and assuming that 3A can find illegalities, they wipe the old financing off and we now have a free and clear home, and the seller doesn’t have to worry about deficiency judgments since there never WAS a mortgage.

    The trust?? puts a new hard $ loan on it for 50% of the AMV. The funds re divvied up as is the equity if any, and we stick a RB in there to cover the pmts.etc. In three years or whatever he refinances and we all cash out appropriate to our interest in the trust.

    OK…I think that’s right. But…

    1. What happens if 3A starts the ball rolling and the lender forecloses? We won’t get our $7500 back, since they’ve already started working. IS that just a risk the invesotr makes? Or am I responsible for that $7500.

    2. I’m assuming that if 3A finds nothing wrong and we get the investor’s $7500 back, that the house reverts to the original owner and the trust is disolved, or somehow we find an RB who has the cash to bring the huge payment due to the table to clear the foreclosure. Which at this stage is unlikely, given the new roof needed also.

    So the seller has to understand that the whole thing is just an attempt to get them out from under their situation, and not a given. That there is a good chance they might end up in the same position they were in before they met us. Or that the lender still might foreclose and leave them with a deficiency judgement.

    Do I have that about right? I’m trying to figure out my out of pocket costs here as I’m sitting here in a 90 degree house with a dead ac condenser and a dead air handler which will already break the bank to fix, and this is July in South FL so we can’t do without the replacements. No money to invest.

    Amy

    #32473
    Avatar of neftalipazo
    neftalipazo
    Member

    Amy thank you for the post as this is a new approach and examples are very helpful. A couple of things from my understanding to hopefully add more food for thought for the moderator before a response is posted.

    So I put the house in a land trust, and hopefully have THEM pay the fees to get it started. Then I find an investor who wants to front the 3 Arch program money. We do the paperwork and get the ball rolling.

    I’m not sure that under this scenario the property has to even be put on a trust. A simple Quit Claim may do. Even if it has to be put in a trust, the cost associated to do that for us members is very low. Remember this will be a PACTrust to begin with.

    The trust?? puts a new hard $ loan on it for 50% of the AMV. The funds re divvied up as is the equity if any, and we stick a RB in there to cover the pmts.etc. In three years or whatever he refinances and we all cash out appropriate to our interest in the trust.

    The IB(s), NOT THE TRUST, will be responsible for either getting the HM loan or to find a buyer that would get the HM loan and assume responsibility for the rest under the trust. The ideal would be to find a buyer that would qualify immediately for a new loan at say 80%-90% FMV. In this way no wait time for the equity cash out.

    1. What happens if 3A starts the ball rolling and the lender forecloses? We won’t get our $7500 back, since they’ve already started working. IS that just a risk the invesotr makes? Or am I responsible for that $7500.

    It is my understanding that the $7,500.00 is fully refundable if they are not successful, regardless. With the exception, I will assume, of seller failing to provide all of the necessary information/documentation in a timely manner.

    So the seller has to understand that the whole thing is just an attempt to get them out from under their situation, and not a given.

    Here you must be extremely carefull AS WE ARE NOT foreclosure consultants.

    And last but not least, you can always acquire this property through a SS with Bill. So there is more than one way to skin this cat.

    #32474
    Avatar of amyhutton
    amyhutton
    Participant

    When working with Bill/NARScor, the house goes into a PACTrust. I’m doing 3A with Bill right now on my own home.

    If you were doing 3A on your own home without Bill, then 3A, as I understand it would help you get the non recourse hard money loan in your own name. There would be no trust.

    But working with Bill there is a trust, so from what I can gather the home is taken out of the trust temporarily so that the new loan can be obtained an then the trust is put back in place. I don’t know in whose name the new loan would be.

    I don’t want the house quit claimed to me, as I want to be able to give it back if suddenly I become responsible for big $$$.

    Amy

    #32475
    Avatar of neftalipazo
    neftalipazo
    Member

    Amy, as I said the example that you presented is different from that of a homeowner staying in the property as is in your case. That’s the reason for my comments. If the homeowner is staying in the property, I understand that the process is like you said in your reply.

    Again, I do not know if the same applies when a homeowner is just walking away and giving you the property.

    #32476
    Avatar of amyhutton
    amyhutton
    Participant

    The homeowner in this case is just walking away.

    #32477
    Avatar of buzzbox
    buzzbox
    Participant

    Amy,

    If you haven’t considered doing this with the LFC administrative process. Give it some thought. I’d be happy to partner with you and handle the process if the homeowner can fund the nominal front end expenses for the trust, notary and mailing.

    #32478
    Avatar of amyhutton
    amyhutton
    Participant

    Dave, I don’t think I could do that in good conscience. IF LFC had more than a couple success stories out of all the hundreds of LFC members working the program, I’d feel more comfortable.

    The 3A process is better documented as being successful, and gives the $7500 back if they can’t do anything.

    This is a personal friend of mine.. If I trust my own home to 3A, then I can trust my friend’s house to them. I just don’t want her coming back to me and yelling at me because something went wrong.

    Amy

    #32479
    Avatar of gshepherd
    gshepherd
    Member

    @amyhutton wrote:

    The 3A process is better documented as being successful

    Amy

    interesting: What documentation are you referring to?

    GS

    #32480
    Avatar of amyhutton
    amyhutton
    Participant

    I”m going by Bill’s word that 3A has done at least 100 mortgage clearances. That he’s seen proof.

    Amy

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