Here are the facts and numbers:

  • House is in CA
  • House is tenant occupied
  • Tenant wants to purchase house 
  • 5 liens on house
  • House value ~$560K
  • All liens delinquent - NOD Filed by Lien #3 below
  • Seller wants any deal that will avoid foreclosure; has no money to contribute to sale
  • Lien #4 wants paid off completely

Liens in order:

  1. Wells Fargo - $210K
  2. Wells Fargo LOC - $143K
  3. Wells Fargo LOC - $99K
  4. DOT on Loan from Individual  - $100K - (Individual wants to cure the $13K NOD default and then foreclose and get his money through Standard Sale)
  5. Abstract of Judgement - AmEx - $133K

Questions:

  1. Can this be structured as short sale?
  2. Or is this a standard sale? 
  3. Commissions paid by????
  4. How do we find $ to give AmEx to pull lien?
  5. Buyer/Lienholder #4 flexible and will carry... can this help us get the deal done?

I know this is a unique sale... but I've been working with this agent for a couple years now and I'd like to come through for him.  Please help/bring ideas... I know there's a way.  Thank you all.

Views: 100

Replies to This Discussion

How much CASH does the tenant/buyer have?

What is the buyer willing to pay?

Does Lien 4 need all his money at once?

Would Lien 4 be willing to take back a note with the buyer?

Your biggest obstacle to close this deal is obviously Lien 4.  Based on these answers you might be able to make it work.

Neil,

Buyer is willing to pay a premium price for home.  I'm told appraisals and CMA show anywhere from the low 500's to the low 600's for value.  Apparently a non-tract home with acreage in an unincorporated outlying area N. of Los Angeles making value very flexible.  Listing agent says buyer is thinking of $560K as initial offer.

Lien 4 is flexible; all he wants is a fair shot at being able to be made whole and doesn't need all his money at once. We could propose a carry back for both Lien 4 and buyer and if it made sense they'd probably agree to terms as long as it's fair to both. 

My concern is finding $ for both AmEx and listing/selling commissions.  I've not spoken to the attorney's for AmEx yet but know they'll certainly want 6-10% to pull their lien and the listing agent needs compensation but won't need full commission to represent both sides.  Bottom line he's very negotiable.  So, where would the $ come from to pay the 5th lien holder and pay commissions since seller has no money?  

I really appreciate the time you've spent and would appreciate some specifics as I'm really unfamiliar with deal structuring in such difficult cases.  Thank you. 

WF can foreclose and get all their $$. #4 gets paid, AmEx gets about 6% of what is owed.

WF won't even talk to WF for the other loans - there is no cooperation there. I think most banks will throw some $$ to a 2nd and $0 to all others for a short sale. They do this to save some money over a foreclosure.

Looking at FNMA/Freddie as an example, Maybe WF would go for paying "the 2nd" 6% ($14K) out of their piece, but they don't have to because there is more $$. This makes it a regular sale for WF. You have $58K to pay the 4th and 5th total (and owed $233K).
So, can you do a standard sale w/WF and a short w/4th? Would the 4th take $58K - $8K .. with that $8K being a "normal" 6% being paid to AmEx? You might convince AmEx that they are simply dealing with a 1st being FNMA and should be happy with the standard 6%. Will the 4th agree to $50K?

The 4th would get more w/foreclosure (maybe full $100K) everyone else should be happy. Why should 4th agree to get $50K instead of $100K?

AmEx gets $8K either way, at most.

Commission comes off the top - an expense of closing.

Assuming the buyer isn't feeling generous about paying over market value to make banks happy, you have $560K to play with and no more.

Let me guess - you do this from a unicycle while spinning plates on sticks, too, right? Wow, I need to watch this...

Joe,

Thanks for answering.  I'm not familiar with asking a lien holder to help pay for 'inferior' lien compensation; especially when it's a big bank in positions 1 thru 3 who will be made whole in the sale of this house.  I'm willing to present anything that makes sense; but must confess I'm not sure best way to present given the number of 'moving parts' in this deal.  

As I told Neil in my response, I'm just looking to present a deal to lien holder #4 that makes sense as he's really pissed about his 'investment' being put at risk by the seller.  Therefore, any deal that makes sense for him to get 'out' reasonably whole will probably make sense.  

Thanks for any help in suggesting an offer that makes sense.  

Yeah, I spent too much time thinking about this - we stopped doing 3 mortgage properties years ago because the 1st wouldn't allow anything to go to the 3rd so the 3rd would say no. But 5? well, more fun than a sudoku puzzle..

WF is a regular sale - has no reason to give a penny to the others, can do quite well foreclosing. As mentioned, you have your problem with 4 and 5, unless your buyer is crazy and wants to pay a bunch more than the place is worth..?? Otherwise, you are just trying to get blood from a rock, ya know? Your buyer willing to pay $50K more than the place is worth?

I was an investor for a decade or so, there is a minimal possibility of doing something for the 4th. You never really know what a seller or buyer wants or is thinking until you check it out. You think this guy wants all of his money right now. If he knows that the 5th will be zapped, he may be more flexible. For instance, some people live to brag that they got all their money - sure, you can do that, if you stop interest for 10 yrs, cut payments to X/mo, etc. Look at the time-value of money - you can make that $100K sometime in the future the same as $50K now. That isn't his deal, but that is the sort of change which might squeeze  that extra $50K that you need. In buying and selling, there are several other popular positions - I don't see that here - like wanting to know that the house will be going to someone who fits in, that they will get monthly payments for the rest of their lives, that they never have to worry again about X happening again, etc. Many times, money is not the biggest factor.  (You can even give him a "better" deal by offering $120K another 4 yrs out or whatever - **better** than just getting $100K back.)

Happy brainstorming. Glad it is yours and not mine. ;-)

It looks like you only have to worry about 4 and 5.  1,2and 3 are made whole and 4 and 5 are short.

Jeff,

Is this really a short sale?  I understand your comments about who's going to get paid in the sale; however, the listing agent asks good questions about how best to 'structure' the sale.  FYI, the 4th lien holder is known by seller and listing agent alike and wants to be made 'whole' in the sale.  

My questions from the original post still stand.  Any chance you could dig in  to propose some answers?  Thank  you.

 

Yes it is a short sale.  The 4th and 5th appear to be short but not 1,2,and 3.  Sure the 4th wants to be made whole, everyone does but the reality is that the 4th is going to have to agree to a short payoff as well as the 5th.  Not likely 3 or 2 or 3 will agree to take a short sale and give more to 4 and 5.  How much is left after paying off 1,2 and 3 and pay expenses from the sale?   

RSS

Members

© 2024   Created by Brett Goldsmith.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************