Habitat for Humanity

[REIrob]

Hello Family,
I received a call from a lady who wants to sell her home.
She said she got from the Habitat for Humanity program.
Are there any stipulations about dealing with these homes?

ARV= $67000
Mortgage bal= $26000(according to her)
Rehab= $7000
Year built= 1996
Comp= $74k- $62k

I am going to drive the neighborhood tomorrow before work.
I was thinking of getting it Sub 2 if everything is on point.
Anyone have suggestions.
She also said she pays her note at a bank, so I guess I would need to have her sign an authorization of release and limited poa.
Give me your opinions.
Thanks. Rob

[Jeffery (LCLA)]

Whatever equity a home has in that HFH builds, HFH puts a lien on the property. The lien is reduced by equal amounts each year for 20 years. They do that to prevent new home owners from refinancing or selling and taking cash out. For example: if there is 20K equity, HFH will reduce the lien by 1k per year. It's been a while since I've dealt with HFH so it may have changed to 30 years or zero years. A quick title search will show any othe liens.

[REIrob]

Jeff,
Thanks, It didn't make sense for me. Now I see I was right. This deal barely made my qualifications so I will cancel the visit tomorrow. Thanks. Rob

[Jeffery (LCLA)]

If it were me, I'd make the meeting and find out what the balance is for HFH. Some of the mortgages are as short as 7 years and the HFH lien is the same duration as the mortgage. Since the HFH mortgages are zero interest, this is the perfect candidtate for a Sub To.

[REIrob]

I didn't see it that way. Thanks. I'll still keep the appt. So, I wouldn't have to worry about the lien?
I need help please explain. Because I feel i need to consult a subject to attny. :SM145:

[Jeffery (LCLA)]

"So, I wouldn't have to worry about the lien?
I need help please explain. Because I feel i need to consult a subject to attny"

I don't know how HFH works today, but a few years ago when I did some work for them, it was explained to me that when they build and sell a house, they sell it for what it cost to build it. That mortgage is a no interest mortgage. Since it costs about 1/2 of what the house is worth to build it, HFH either does a second mortgage or puts a lien on the property. I can't remember exactly which. The put the second/lien on the home to prevent the new homeowner from refinancing and taking cash out. The second it a no interest mortgage/lien as well. The new home owner doesn't have to pay off this second mortgage, HFH reduces the balance each month automatically. I would have to assume that if the homeowner of a HFH house sells their home, that the second would have to be paid. However, if the home is taken subject to, and the new owner keeps making payments on the first, then the second would be reduced automatically. I don't have any experience with buying or selling HFH homes so I can't tell you for sure which mortgages would have to be paid or not. I'm sure that the homeowner has paperwork from HFH with regards to their mortgage.
Keep me posted about you meeting. If you can take this one subject to, that would be great. I'd love to get my hands on a zero interest mortgage.

[neodemes]

I'm curious as to why the owner is selling. Did she tell you her motivation? A no interest loan on a great deal (presumambly) to begin with seems an odd thing to walk away from. Why is she?

[Jim FL]

Bruce,
I've had calls from sellers who were motivated to get out, in all kinds of situations, even some in Habitat for Humanity houses.
Why would someone want out of that great package?
Here are a few reasons, and they are not exclusive to HTH houses, or sellers in them.

Divorce, wants out, bad memories, or neither party can agree to allow the other to keep the house.
Job transfer, and housing is offered.

The most common, they cannot manage money well, even with a great loan package, managing a mortgage account takes discipline and diligence.......remember, a lot of these folks are extremely low income not very well educated folks.
They drop the ball, just like multitudes of other sellers out there.

And tons of other reasons why a seller would NEED (in their mind) to 'get out'......wether in a HTH house or not.

No different than any other deals, just different financing arrangement to deal with for the investor.

Make sense?

Take care,
Jim FL