Posted on 02/24/2013 7:36:13 PM PST by ducttape45
I am hoping that someone on FR can help me with a financial issue.
Let me state first out that this is not a request for assistance. I don't want to run afoul of any posting rules or guidelines. This is a request to find out if anyone knows of a resource that I can avail myself to in order to help me.
Also, I know how some of what I will share will sound. I know that there could be some personally embarrassing information to follow. I make no excuses for the situation I find myself in, but I am hoping that I can find help in spite of my current situation.
The situation is this: I am living in a house that is somewhere in the process of foreclosure. Where exactly is still a mystery. I am told that it is now up for short sale but I've been kept in the dark on that aspect of what is going on. What I do know for sure is that the investor has failed to make payments on the house and for the last 9 months I've been living here rent free.
The realtor who I deal with told me that she would like to see the house sold to me. The amount owed on the house is somewhere in the neighborhood of $53,000 but it will short sale for $10,000 - $11,000. I have $5,000 in my savings account. All I need is another $5,000 - $6,000 and I can buy this place. And therein lies my problem.
There is no way to say this except to say this: my credit sucks. I won't post my FICO or credit scores, but they are not good. It doesn't help that I had to file for bankruptcy last year and it discharged in September. I actually have no bills to pay on except for utilities. I do have school loans that are under forbearance until September 2014. So I am in a unique position. Unfortunately, no lender will look beyond their rules and regulations to see that.
In their defense I know the rules are there for a reason and after the recent national mortgage meltdown I can't really blame banks for being much more cautious, but I was hoping that someone would see that I could pay a loan back within just 6-8 months tops and bend the rules a bit.
Please, this is a serious request and I would appreciate no flaming whatsoever. While the facts are the most very basic (believe me, there are many more things about the price of the house, the fact that the house was once part of military housing), these are still details that are personal in nature and I share them only in the hopes that someone can lead my in the right direction.
Moderator, if this post is inappropriate, do what you must. Thank you.
I’m in a job, a very steady job. Have been since June 2004. I’ve been calling and emailing banks and so far only one been talking to me. I’m gonna looking up some more tomorrow. I’m getting too tired to type. As for an new investor coming in and buying the place, before that happens the place will most like go up for a sheriff’s sale, which means I’ll have to move out before that takes place.
>>Oh trust me, I love waaaaaaaaaaaaaaaay below my means.<<
Me too.
Then I got a divorce ;)
To be able to own the house and get it paid off within just a few months would finally put me in the driver's seat for once. And if/when I purchase it, I already have plans to start remodeling the place, on section at a time, and bring it up to code.
I just need a lender who will work with me.
And I need to get to bed before three keyboards turn into 6. Night gang, and I'll check back in the morning. Thanks for your suggestions.
Let’s try it this way: if the lender forecloses on the house, can you approach them separately and ask them if you can continue renting the house from them? Perhaps on a rent-to-buy arrangement? It would be innovative, and mortgage companies aren’t known for being imaginative, but on the other hand foreclosed unoccupied houses quickly deteriorate into being of no value at all, and your presence could prevent that from happening. It would give you time to save up an additional $5K,
And while you’re saving, remember that whenever you buy a house there are various closing costs—taxes, escrow contributions for six months or a year of taxes and insurance, appraisal costs, filing fees, title searches, owner’s title insurance, gouges, cheats, superfluous charges, credit check fees, the lawyers, you name it. These can run into several thousand dollars and they are paid at the settlement. You can’t just bring the down payment to the settlement table and expect to walk away with the keys. Few buyers leave the settlement without feeling raped. So you will have to accumulate more than just that extra $5K you need.
First of all, no mortgage company is going to finance a $5,000 loan. You’d have to go to a local bank. Go to your bank and explain it to them. Tell them you’d like to finance $10,000 and will put up $5,000 for collateral. Of course they’ll have a lien on the house.
I would think any bank would jump on a loan of $5,000, or even $10,000, for a property worth $53,000. If this doesn’t work, sell your car or do whatever it takes to come up with the 5 grand.
Guess I should have read better. I thought you said it was worth $53,000. With the added information I have to ask why would you want to buy it? It sounds like a money pit. I’d spend $5,000 on an RV before I bought the house.
That stinks, I’m sorry to hear about that. A bankruptcy in 2004 should have met the end of credit history by now (over seven years past), and you’d be treated as a clean slate, so there has to be more to the picture. But anyhow, if the reality is you have to move, maybe you might look into one of those ubiquitous rent to own dealies, or just go rent elsewhere. When the good Lord shuts one door, others may open that are better.
Contacting the bank directly means they don't have to pay a REALTOR more money on a property they're already losing on.
Plus, you're currently the tenant and you're less likely to steal all the copper wiring for crack money and flood the basement if you have an interest in the property.
As an aside, if all else fails and you're not able to purchase, you may be able to get them to do "cash for keys." In other words, you move out all your stuff, leave the house "broom clean" and un-destroyed and they pay you a nominal amount $100-$300(?) to turn the keys over to the REALTOR. More people than you can imagine take a hammer to the walls, flood the basements, steal whatever they can (fixtures, wiring etc) before vacating the premises......I would say, it is mostly tenants that do this. They paid the rent and the landlord pissed it away so they are going to "show them," or get their "revenge."
Every day the bank has the property, once it's foreclosed on, it costs them money. They pay REALTORS to do the BPO (Broker's Pricing Opinion) to determine from the outside how much the bank could get for the sale. They have to pay for the trash-out (whatever you leave behind has to be removed and junked - generally be insured contractors).
The lawn has to be mowed/maintained. If there is snow in your area, the driveway/sidewalk etc needs to be cleared. If there is a danger of the pipes freezing; they need to be drained, or if the bank can get more money - the heat/electric needs to be on.......this all costs $$$ $$$ $$$. If the bank feels it is worth it, they may pay for certain repairs, or for the house to be cleaned.
The longer the house sets on the market, the more the bank has to spend, AND it generally means the lower the sales price. If the bank has multiple houses in the same area (doesn't even have to be the same street) that are foreclosures, that brings down the other values as well.
The reason I'm saying this, is because if you are armed with this information, you may be able to manipulate the bank into lending to you.....they may want you buy PMI in with your loan to help insure against you stiffing them on the mortgage.
I haven't done foreclosures (as a REALTOR - and foreclosures, aka REO was ALL I did) in over 10 years now; however, the biggest thing the banks would stress to the homeowner was "call the bank." If you can't make payments "call the bank." If you need to renegotiate terms, or can't make a full payment, "call the bank." I felt like the Grim Reaper when I would o around handing out the notices for the bank.....the only thing I was allowed to tell people was "call the bank." Out of all those times, I only had two instances where the people said they would "call the bank," and only two instances where the house wasn't foreclosed on shortly thereafter.
Take all this with a grain of salt, as I said, it's been awhile since I've dealt with this sort of thing.
I know you can’t short sale your house to a relative.
I imagine you can’t short sell it to yourself either.
It that were possible, the lender would be better off just taking off most of the amount owed and modify your mortgage down to the short sale price.
Better check it out and see if it is allowed to SS the hse to yourself.
If all else fails, I’ve heard that ducttape can fix anything!
I know how that sounds but I still feel (and I can't explain how I feel this way) that this house should be mine. It's not a moneypit. True it needs some work, but for my purposes it is just what I need. As for the fees, the investor is paying all that. That much I do know. I've been told to have $10,000 ready to go and the house in mine. I appreciate all your comments and I will check out that website mentioned in one of the posts.
Anyone else out there with a suggestion or two?
One thing you need to be sure of is the tax situation. Depending on where you live, you may be liable for all of the back property taxes (as the new homeowner) and for all of the closing costs. It might cost considerably more than the sale price. Check with your realtor on this, but you’re probably going to need something closer to $15,000 to close.
As far as getting a loan from a relative: I’d go into this as if you were getting a loan from a bank. Give them 10% interest and set the payments with a direct deposit into their account. You may be able to talk someone into it as a true investment, but they’ve got to see a 10% return to make it worth their while. (And be realistic. Don’t set yourself up with too short of a time frame so that they aren’t disappointed if you fall through. Make SURE that you can pay it back on time.)
As for your bad credit - going in with 33% down on a secured loan would help a lot. I’d try again. If you’re married, put it in your wife’s name only.
That’s something else you could try. If I were loaning that much money to a friend/relative, I’d be much more comfortable if the property were put in my name. (Plus, they could get a lower interest rate than you can.)
You get a 10 year loan at (say) 5% interest and pay $159 plus taxes and insurance. They pay nothing upfront and use your $5000 as the down payment. You give them $100 a month for helping you out (and saving you at least that much in interest by putting it in their name). When you pay the loan off, they sign over the house to you. It would actually be a boon to their credit and they could write off the interest payments on their taxes.
Here’s the sticky part. THEY actually own the house. THEY are responsible for the payments. Their credit and reputation is on the line. So if you screw up, they have the right to kick you out and secure their property and you’re out a house and your $5000. (As they should) But they can get renters to cover their butts until they can sell the property and get out on their own.
That’s how you sell the idea. They have nothing to lose. If you make good, they make $1200 a year free and clear for the life of the loan. If you screw up, they own a house that they can rent out for only $350 a month and make a profit. They have an investment property.
Personally, I’d do this (depending on the location of the house) if I could afford the payments in case of default.
And yes. It ALL has to be in a notarized contract.
Unless that realtor actually represents you meaning she is contractually obligated to you she is not representing your interests, she is representing seller’s interest.
You are being kept in the dark for a reason. Suspicion would be that property would fetch considerably less at auction than the amount she’s wanting you to pay.
The whole deal sounds screwy. Don’t do it, imho.
Hello ducttape45.
Can’t give you my credentials without divulging personal info, but let me say I have a mountain of cred on this topic.
First of all, it seems you want that particular house because it’s highly convenient to own it. Looks real good. Good enough to do some very inconvenient things and risk getting into a most uncomfortable situation for both you and your nest egg.
Please take a cold shower. There are better houses, cheaper ones too, and better locations.
Now the assorted advice. Take your pick.
Advice 1. Nice work avoiding rent and building a nest egg. This won’t endear you to the bank. ANY bank. They would ask to see your records and notice that you failed to pay rent to anyone. Not that the bank, or any bank, will give you the time of day. “Call the bank” was a great suggestion once upon a time. Today, sterling credit does not get you a loan on a fixer upper REO. Don’t waste your time. Banks are obligated to shed their REO, but they don’t want to play games with deadbeat tenants and risk derailing the sure thing: foreclosure sale. I repeat, they are obligated to shed the property and would have some splaining to do if they took it off the schedule at the behest of a “tenant.” So...forget calling the bank. You haven’t credit, you haven’t a good track record, your rent payments aren’t in escrow. The house wouldn’t pass inspection, wouldn’t meet the loan-to-value ratio, would make the underwriters laugh.
Advice 2. Hang onto your $5000 and go to the foreclosure sale. There’s a good chance nobody else wants that house and you could get it for 5. Don’t forget they will want the back taxes. Remember that ultimately your fate may be decided by code enforcement or local tax office. Do you know what is on file at code about the house? What the taxes are? If you go to a sale without doing that homework, you are likely to get shorn if not skinned. And for what? A house that looks convenient to you after months of not paying for it.
Advice 3. Do NOT take your $5k to the sale. Tuck it away for emergencies, or for a security deposit on your next rental, which could be soon. Although in most areas there are laws protecting you, as an occupant, from eviction (as long as you PAY), a new owner could evict you rather quickly, by a phone call to code if he’s in a hurry, or by notice he intends to reside there.
Advice 4. Know that the bank has the power to evacuate that house of all your possessions, take them all to a landfill or let the trash hauler distribute them to whomever, and there would be nothing you could do about it. So don’t leave home unattended. They would also get your $5k if it’s in the house. You are playing with fire. They can strip you of everything you possess and the sheriff will help them.
Advice 5. Broaden your horizons. You have a job and several times more income than I enjoy, but I found a wonderful house and paid cash for it and it’s fun fixing it up on a shoestring budget. All you really need to do is think out of the box. Think you can live anywhere else; transfer; shop around; parlay your $5k into ten or fifteen and maybe THEN you can blow five on a substandard house full of warts and see if you enjoy fixing up a house while holding down a job and looking over your shoulder for the code officer.
Advice 6. Borrow the money from some friend who will never forgive you for sucking him into the pit that was only going to cost him $5k which you would pay back, until you couldn’t because of repairs, code, utility hikes, taxes...Make sure your friend is disposable, non-violent, and has no lawyer friends or relatives. This house has the potential to cause you a great deal of inconvenience that you probably have not begun to imagine.
Advice 7. Consider that if you do nothing, and if you don’t suffer a total cleanout while at work one day, you could stay there rent-free for a few more months. Enjoy this advantage, it is not given to people who have a prayer of borrowing money. No lender would fail to notice it in your records, and it will dog you like a bankruptcy, which by the way they DO notice, no matter how long ago it was.
Advice 8. You can file bankruptcy again in a few years. They know that too.
Advice 9. Stiff the utilities and the credit cards and everything else for a couple of months and you’ll have another $5k. Negotiate payment plans later. Laugh at their pain.
That’s my .02, neighbor. Unlove the house asap. Get over it. Home ownership is no perpetual honeymoon, and you’ve done pretty well for yourself as a tenant. Pretty well indeed.
“You are being kept in the dark for a reason.”
Nine months of skipping rent makes a person glow in the dark. To a lender, a realtor, a banker, such a person is positively radioactive.
There’s also a whole community of flippers known to the average realtor of junk property. Could well be the realtor already has other plans for this place, regardless how concerned and sympathetic she claims to be. (Call me cynical.)
Walk away. The county may have reasons to condemn this property. Other considerations could be feasible but first separate the lot appraisal from the improvement appraisal.
Other people to turn to:
Got any grown children? If they work they might be interested. Offer to put them on the deed. I would recommend you take only ONE child, if you’ve more than one, into such an arrangement.
Parents? Ex-spouse? Don’t laugh, the parent of your heir might be interested.
Neighbor. You say you’ve a good neighbor. You could tell this person that it is in their interest to purchase a property next door. It’s like choosing your neighbor, which is way better than taking pot luck. Ask if they can buy the entire property and give you a rent-to-own deal, maybe with an option (ie, you pay them something to buy the place and give you either a lease-purchase, or a mortgage, or a contract for deed). If it were a contract for deed, it would be very safe for the neighbor; you don’t pay, they can toss you out quicker than if they’d given you a lease-purchase or a mortgage. If you do pay as promised, they continue to have a nice neighbor instead of a Pacific Heights experience.
Church. Ask the pastor/whomever of your church, presuming you have one? to buy the place on the same general idea as you’d ask the neighbor. Just because they’re a non-profit doesn’t mean they can’t do business. However, they would need to use their own cash, the place can’t be financed.
Credit union.
Again, these are suggestions I make without approval. I personally think only a hopeless sap would lend money to someone with a recent bankruptcy, bad credit, student loans, low income, double vision and a failure to pay rent for 9 months. For a professional lender to do so would amount to criminal behavior.
PS: About the insulation...Indiana may have a weatherization program. In my state you can, if poor enough, get your house fluffed up free of charge.
Have you considered taking the 40,000 loan route, and either a) using the excess to make improvements and/or repairs, or b)repaying the bulk of the loan immediately, or c) some combination of a and b? You would get banged for higher costs on the transaction than on a $6k loan, but it may be worth it to you.
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