I am curious to know if it is possible for investor buyers to bypass the normal short sale process and directly negotiate with banks to purchase a short sale property. I currently have a seller client who, prior to listing with me, had been contacted by an investor about a year ago who wanted to purchase her home. She did not pursue that option then; but now that we are in an agency relationship, she decided to reach out to this investor who, upon learning that the house was listed, promptly asked her how long the listing agreement was for, as he was not going to go through an agent and that his lawyers could get the short sale approved. Is this normal, and will any bank allow for a short sale without the house being listed? It sounds to me that the only way that can happen is if the investor is a licensed agent themselves...which means that, in effect, this investor is soliciting my listing under false pretenses...

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It is not a scheme. We are in the business of keeping people in their homes. With short sales the homeowner leaves with nothing and their credit is destroyed. Our program allows the homeowner to get their defaulted loan completely wiped out via the note purchase from their bank. The homeowner would have opportunity to start all over again in the same property, with a brand new 30 year fixed rate mortgage, that would be reduced by up to 50%.

To top everything off the mortgage would be offered back to the same homeowner at 90% of the current appraised value, with 10% equity. Now compare this with a short sale or a loan modification none of the government offered programs can compare either.

When a distressed homeowner is approached by a short sale professional the only option they bring to the table is a loan modification or doing a short sale. We are also able to offer homeowners the option to walk away from their property without destroying their credit.

I don't really see any value in this program as you describe it for most of the homeowners who call me.  I ask them all if they would want to keep their house if that was an option and 90% would rather burn their houses down than stay there.  They have too many painful memories and just want out by the time they contact me.  Maybe other people have different experiences so I will leave it at that.

Regarding the house being offered back to the homeowner at 90% of appraised value part, I fail to see how that is a good deal.  First, we are in a phony housing bubble that is already showing signs of unraveling (again) so I bet that the 10% "equity" will be gone in 12-24 months anyway.  Second, the 10% "equity" is based the current appraised value.  I think most if not all of the short sale specialists in this group can attest how worthless appraisals really are.  I have purchased multiple homes at 60-80% of their appraised values from HUD so in reality those appraised values were wrong.  It is very easy to get an appraisal at 10% (or more) higher than the real the current market value of a house due to condition.  Since most homeowners in financial distress defer maintenance and repairs I am betting that most of the houses would qualify as physically distressed.  My experience with appraisers is that they have a terrible time downward adjusting house values for poor cosmetic condition as they grossly underestimate how negatively buyers will view those cosmetically challenged houses.  Therefore, that $100,000 appraised value may in reality be closer to $80,000 in the open market so that homeowner who thought they had 10% equity with your program will probably still be underwater.   Therefore, the blanket assumption that this is a great deal for homeowners versus a short sale is off base.  The most I can grant your "10% equity" home retention plan is that it should be considered as a option for those homeowners who want to keep their houses and closely evaluated to see if it really is a good deal for them.

What kind of contract do you require that the homeowners sign?  Are there fees that they have to pay?  Can they back out if the current appraised value is too high resulting in your plan being a bad deal?

I don't really see any value in this program as you describe it for most of the homeowners who call me.  I ask them all if they would want to keep their house if that was an option and 90% would rather burn their houses down than stay there.  They have too many painful memories and just want out by the time they contact me.  Maybe other people have different experiences so I will leave it at that.

A. The value is being able to keep the people in their homes. if the only option I had were a short sale or a loan modification, I would want out too. The painful memories were built up because the homeowner had to face dealing with the bank all by themselves.

If I was paying $1,500.00 a month as a mortgage payment; and I defaulted on that payment and received a letter from the bank calling my note due and payable for $300,000.00; I am sure you can see where the bad memories can come from, because everyday the bank would be calling me asking me for money that I don't have.

When the homeowner's called you the potential to go from paying the aforementioned mortgage amount to a payment of $750.00 per month did not exist. To get the bank off their back they had to attempt to do a short sale, or to file a bk. As for the home being offered back to the homeowner at 90% of appraised value; that is the point I am trying to make, which is regardless of whether the appraisals are worthless; the fact is that there is still a home available to offer back to the homeowner.  When the homeowner receives a mortgage reduced by up to 50% at that moment, do you think that a homeowner is thinking about  losing their equity in 12 to 24 months?

As opposed to not up rooting their family, and breaking their ties to the community, I would think that if a homeowner receives a Lis Pendens right now and short sale, loan modification, or the ability to keep their home and wipe out their old mortgage debt was offered to them, which option do you think the homeowner would choose?.

      Example:

 

$250,000 Old Mortgage

$230,000 Current Appraised Value

$207,000= 90% of Current Appraised Value

$12,000 Fee Service Payments

$7,200 60% credit from Service Fee Payments

$199,800 New Mortgage Fixed Rate For (30) Years

  

Based on the example above which is better a short sale, bankruptcy, or loan modification? the homeowner would have nothing but destroyed credit, and with a loan modification they would have new debt on top of old debt. The only one who would benefit is the realtor and they would benefit by selling the home, but what would the homeowner get once the property is sold? where is the value with this situation?

 I just cannot see where doing a short sale is more beneficial than the homeowner keeping their home. As for fees, yes there are fees and the breakdown is as follows 60% goes towards the future reduction of the homeowners new mortgage, and 40% goes to attorney's fees.

 100% of the clients who come to me are not thinking about future housing market fluctuations, all they want to know is what to do to keep their home; and I show them exactly how to do just that; and after they submit their paperwork if they get cold feet and want to back out they can do so within (30) days  The required paperwork would come directly from the investor to the homeowner. 

  

      

       

Hi Kevin:

I don't think you read my response.

As I stated, the people who call me don't want their homes anymore. I ask them if there was a way to keep their home would they want to and they say no. Therefore, no value in a home retention program.

Again, the 10% equity/90% LTV new loan with your program is based on the appraised value, which is realty is meaningless. Appraised values hold no water with me based on my experience with appraisals.

What are the "$12,000 Fee Service Payments" shown in your example below?

Your Example:

$250,000 Old Mortgage

$230,000 Current Appraised Value

$207,000= 90% of Current Appraised Value

$12,000 Fee Service Payments

$7,200 60% credit from Service Fee Payments

$199,800 New Mortgage Fixed Rate For (30) Years

Your Comment: Based on the example above which is better a short sale, bankruptcy, or loan modification? the homeowner would have nothing but destroyed credit, and with a loan modification they would have new debt on top of old debt. The only one who would benefit is the realtor and they would benefit by selling the home, but what would the homeowner get once the property is sold? where is the value with this situation?

My Response: I disagree about the credit damage due to a short sale.  There is very little credit impact from a short sale itself.  It is the missed mortgage payments that do the lion's share of the credit damage.  I had a Seller complete a short sale without missing any payments and his credit score declined by only 29 points.  Hardly, "destroyed credit".

Your Comment: I just cannot see where doing a short sale is more beneficial than the homeowner keeping their home. As for fees, yes there are fees and the breakdown is as follows 60% goes towards the future reduction of the homeowners new mortgage, and 40% goes to attorney's fees.

My Response: There are many scenarios where keeping the house is a bad deal for the borrower/homeowner.  First, many homeowners purchased homes when in realty they were not financially strong or responsible enough to own homes.  Some realize that and some don't.  However, it is better for them to just rent.  Second, the whole potential bogus equity thing I described multiple times can be a problem for the homeowner when they need to sell again, especially in light of the bubble it appears we are in again.  Third, a lot of my clients need to sell their houses because they are in poor condition with defects and/or deferred maintenance in the thousands of dollars.  Keeping their home won't help them with this.  Fourth, it is clear that your investor is buying the note at 60% or less of the outstanding principal balance and well below 90% of current market value.  Why not offer the homeowner a better deal than a measly 10% equity which can easily be an accounting move in a appraisal, or washed away by the smallest market decline? 

Your Comment: 100% of the clients who come to me are not thinking about future housing market fluctuations, all they want to know is what to do to keep their home; and I show them exactly how to do just that; and after they submit their paperwork if they get cold feet and want to back out they can do so within (30) days The required paperwork would come directly from the investor to the homeowner.

My Response:  Not thinking about the future housing market in light of their financial condition and realistic hold time for a house is a major reason why the homeowner ended up in financial trouble.  They planned to hold for just a few years and sell for a profit even though they purchased in a inflated market.  A short sale gives the people a chance to reset everything and start over and it ends the credit damage.  Keeping their home may or may not do this and could cause problems later due to the equity not existing.  Also, not letting a borrower back out after 30 days may violate some state laws.  You need to be careful about that.  Also, I wonder if crucial information is withheld from the borrower/homeowner until after those 30 days are up, or if everything is disclosed up front.  For my part, if a client decided they wanted to keep their house after a short sale file was opened I would let them out of the listing agreement.

This is my last response in reference to going back and forth on this board. Regardless of how many times we reply with rebuttals with me defending my investor and their program; and you trying to pick the program a part. The fact still remains that my Investor is in the business of keeping people in their homes.

 

The homeowner's who came to you could not qualify for any program that could help them. As for the credit score drop of just 29 points good for them ; because it does not happen that way for most people.

So, I guess the banks had the homeowner's best interest in mind in reference to thinking about future market fluctuations. As a matter of fact I just signed a new homeowner client who was being worked on by a real estate agent that was trying to secure that listing, I ask her what options she had available; and as soon as I presented the options I have available, (1) hour later she called me and signed up for the program.

 

We have thousands of real estate agents offering this program all over America. I don't mean any harm but 95% of the people that come to me have had the following happen to them. Some of them had their loan mod approved, only to get served with sheriff's sale paperwork; where our lawyers had to stop the sale. The same situation has happened with clients who were in the middle of trying to complete a short sale.

I appreciate the wisdom of you having years of experience as a real estate professional, however this is a case where something new is being offered, and it goes against everything that you learned by doing numerous transactions down through he years.

 

To be quite frank, just about every sub-prime loan was based on inflated real estate values, so where were the equity concerns then? There were not any; because the banks, mortgage brokers, real estate agents, & realtors were all in it together.

So, as for our program not being of any value I beg to differ with you, the only person that benefits from a short sale is the real estate agent, because the homeowner gets nothing. What I am about to write is really going to shock you, and here it is. Although our flagship program is keeping people in their homes, if a homeowner absolutely wants to throw their hands up and leave the property, we have a program for this as well. 

The homeowner's debt with their foreclosing lender, would get completely wiped out; including the potential for a deficiency judgment.  

Here is the kicker, the real estate agent would make more commissions in this situation, than with helping people to keep their home.

 This investor is backed by a major hedge fund  has nothing to hide, they are not in the business of swindling people out of their homes. Everything is disclosed to the homeowner in the LOI & closing documents upfront. What it comes down to is exactly what the homeowner wants to do.   

 

    

    


 


 

 


 


 

 

 


 


        

 


           

 


 

 

 

 

 


 


           

 

   

I just because some of you may have never heard of this system, does not mean that It that it don't exist. Sure there have been many companies who came and went; but this is not one of them. As a matter of fact I am about to keep 4 people from losing their homes to foreclosure in Jacksonville. One of the main reasons why most of you may not have heard of this program, is because in the beginning this program was marketed mainly to private investors who wanted to get rid of or restructure their bad paper.

if the property meets our purchase criteria, and if we have permission of the homeowner, my investor is able to purchase individual distressed real estate notes from chase, wells fargo, boa, Freddie mac,Fannie Mae, or whoever; restructure the note and offer it back to the original homeowner at 90% of market value, with a 30 year fixed rate. And all or the above can be done even if the homeowner is in the middle of trying to complete a short sale or loan modification.
Jacksonville, Baldwin, Orlando, winter park, & green cove springs.

Mr. Colby. Please see below.

1. Does the homeowner want to keep his home?

2. Is Wells Fargo foreclosing on the homeowner?

3. Is the mechanics lien from a construction company?

4. How much is owed to boa?

5. Has the homeowner tried to negotiate the IRS  lien? 

6. Has the homeowner filed bk

7. Has the homeowner been saving any money?

8. Is the HOA trying to foreclose too?

9. Have you tried to find help for this homeowner?

10. Does the home have a sheriff's sale date?

11. How much are the monthly mortgage payments?

12. Can the homeowner provide copies of their loan docs?

 

Here is my take, starting with the $600k mechanics lien how old is it? depending on the age of the debt, it is possible to settle this for pennies on the dollar. The same is true for the HOA and the IRS lien I specialize in debt settlement negotiation, and as a matter of fact this is part of my core business which is credit restoration.

I produce results first and then I am paid. However my investor is able to work with properties that has multiple liens. is the HOA real aggressive?. As for the 2 bank liens Wells Fargo and Bank of America when were these loans made? Is there a balloon payment due? the last thing you want this homeowner to do, is to file bankruptcy, because if he does and if the home is included, we will not be able to work with him.  I would like to get this homeowner into the program, and save this home so, your prompt answers would be appreciated greatly,

 

   

.     

If your client does not want to save their home, we have a program available that will allow your client to walk away from their property free and clear, without destroying their credit. Since your client has multiple liens on their property; I suggest that he walks away and start all over again.

It appears that your client is wealthy and should be able to afford to live in another walk away property should we find one for him. Is he firm on staying in 3 million + homes; or would he come down to under a million. There would be no credit check all that is required is that they either rent the property or lease it with the option to buy in the future.

With the aforementioned situation, if your client walks away from their home, you would find someone that is willing to rent or lease option the property while the investor is negotiating the note purchase.

If you find a renter, you would charge the market rate for rent and security in that area, and your take would be the first month's rent as your real estate agent fee. You would also receive 5% of the note purchase amount; after the note purchase is complete.

Now let's say that the renter does not want to purchase the property at the end of the lease or lease option period, the property would be given back to you to relist and sell for a 3rd commission on the same property.

If your client winds up at another walk away property, they will have the option to purchase that property. None of the above would cost your client anything except monthly rent, should they move into another walk away property. This what I suggest.     

    

Mr. Colby. is this the only client you have in this situation? we can work with distressed commercial real estate as well.  My people are on the multiple lien situation, and I should hear something tomorrow. Whatever you do if your client has to file bk don't let him include the house in bk. don't take this as legal advice because I am not a lawyer. Why don't you see if he can file the bk for all of the other liens  except for wells fargo..     

@Kevin Young Jr.  Just asking questions so that we can better understand....  why wouldn't your company just buy the note of the distressed homeowner and go in and negotiate your deal?  Do you need the homeowners permission to buy the note?  Seems as though your folks would already know which properties are in distress and reach out to the lenders you work with and just purchase the notes. Worst case you get the note and the homeowner does not want to stay, you can easily sell for market value and make and extra 10% since you dont have to keep the homeowner in for 90% of value.

How many total note sales have you done?  What is the % of homeowners who successfully stayed in their homes after you bought the note and renegotiated?

How much does this cost the homeowner?

First of all I am not the note buyer, I am affiliated with the note buyer. To answer your questions we need the homeowners permission in order to approach the bank and buy the note. 100% of the homeowner's who had their notes purchased from their bank are still in their homes.

 When we first offered our service to these homeowners they were desperate to keep their properties. There were no other options available to them, because of their situation. would you up and leave your home after just saving it?   

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