Help me deal with a lender, please

[dealmaker]

OK, I never said I knew everything, I just sound like it most of the time! Following info is the basics of the deal:

Husband and wife are splitting, loan is about 5 months in arrears, loan balance about $58K, FMV about $110K, needs about $10K or so in fixup/cleanup/landscaping.

Wife wants $7500 to walk, husband is a drunk/druggie, won't sign anything. My atty suggests giving the wife $75K, buying out the lender (wells fargo IIRC) and then foreclosing on the husband, who hasn't got a pot to pee in or a window to throw it out.

Here's my problem, lender wants $5,000, that's right, five thousand for late charges, BS charges and etc. I'm in TX so there's no doubt about the legality of doing what the atty proposes, and his legal bill to me would be less than a thousand. HOWEVER, here's the problem, I think $5K is outrageous, even for a bank.

Any suggestions, any ideas.

Usually I do straight up deals with owners and they settle the bank.

Help me out please.

dealmaker

Remember, in Texas we consider an honest politician to be one who once he is bought, stays bought!

[Dan Auito]

OK, I never said I knew everything, I just sound like it most of the time! Following info is the basics of the deal:

Husband and wife are splitting, loan is about 5 months in arrears, loan balance about $58K, FMV about $110K, needs about $10K or so in fixup/cleanup/landscaping.

Wife wants $7500 to walk, husband is a drunk/druggie, won't sign anything. My atty suggests giving the wife $75K, buying out the lender (wells fargo IIRC) and then foreclosing on the husband, who hasn't got a pot to pee in or a window to throw it out.

Here's my problem, lender wants $5,000, that's right, five thousand for late charges, BS charges and etc. I'm in TX so there's no doubt about the legality of doing what the atty proposes, and his legal bill to me would be less than a thousand. HOWEVER, here's the problem, I think $5K is outrageous, even for a bank.

Any suggestions, any ideas.

Usually I do straight up deals with owners and they settle the bank.

Help me out please.

dealmaker

Remember, in Texas we consider an honest politician to be one who once he is bought, stays bought!

Claude, if the wife only wants $7,500 then your looking at $65,500 if for some reason the lawyer thinks $75,000 is the number than I would justify a reduction based on the $5,000 BS Charge making the offer $70,000 doesn't sound like the wife cares and you accomplish the same thing!

Just suck it up and consider it the cost of doing biz, it isn't going to cost YOU any more than you where already willing to go so why fight it?

P.S I guess it's not a community property state and the drunkerd husband is not on the deed if he is and does make payments what happens to your cashola? I guess you would get the tenant from hell. little more clarity on dear hubby , oh drunk hubby! Would help clear that last part up.

There is opportunity in solving problems and momma always told me not to cut my nose off despite my face, or is that to spite my face. :SM032:

[Aldo]

Based on the info you provided, this appears to be a good deal even if you end up paying the $5K. That aside, I'd want an itemized list of that $5K in charges. That number is mind-boggling. Having a savvy attorney is your best protection against being charged for things that are not attributable to your business with that bank. I'd offer some thoughts, but your attorney has probably forgotten more than I'll ever know. Just be sure that the bank understands that foreclosure will probably cost them a lot more than $5K before it's over.

[Just Information]

This can be a daunting process - the 5k fee is a little high but not knowing the lender terms unable to determine what the issue is and why so high.

Has your customer ever placed this into bankruptcy?

Let's run the number a little and say 6mth hold at most


MV 110K
Repairs 10k
Wife payoff 7.5k
Mortg payoff w/fees 63k
Closing cost $825 your end
So up front we have $81,325 in the deal (74% of Mkt value)

Interest on purchase estimate (I use my rate of 5%) $2,033
Taxes $800
Insurance $594 (based upon builders risk type policy)
Utilities $660
Total holding cost $4,087
Now we have into the game $85,412 (78% of Mkt value)

Now do keep in mind that you will have a title issue and you will find that many may not provide the title insurance, as at this point you can not get a clear title.

The other issue you will face is this, you have purchased the rights to the property from one owner and have paid off the loan by doing this you have made the loan current - now you have several months of delay as you now must go through the process of allowing the loan to become delinquent, once you can justify the delinquency on his part you than start the foreclosure proceeding all over again - it will be suggestive to have a attorney handle the proceeding.

Your cost should be no more than 2k for this, but do keep in mind the he can use many delay tactics such as bankruptcy to drive up your cost.

I would suggest you attempt to purchase the note from the lender in it's current state and you as the note holder (note owner) can assume the foreclosure proceeding and not have to start the process over.

This is a great deal, but you want to try to purchase the note it self as this will save you in cost and time.


John's like the sugar you put on your strawberries, he just makes it sweeter!

[dealmaker]

OK, I got home this afternoon, got a look at the notes from the attorney and finally got a chance to re-read what I wrote two days ago.

Yep, it's $7500 the wife wants, not $75K!

The loan bal is about $48K but about 5 or 6 months in arrears so figure about $1800-$2000 of that is past due interest. I'm guessing the banks probably ad a certain amount per letter and a bit more if their lawyer writes the warning letter, my atty has already asked them for a breakdown on how they arrived at the total.

Essentially the following are the steps:

(1) I would payoff the wife (obviously not straight out, in escrow until I get full (special warranty-used in trustee's sales) deed!

(2) buy the bank's interest/payoff the note, ask them to discount.

(3) as the noteholder of the defaulted note there's no delay in my right to foreclose (trustee's sale) on the note. In any event in Texas a note that is due on the first is in default on the second of the month and you can hold the sale (subject to notices) on the first Monday of the following month.

Husband doesn't want/intend to sell. My concern is that he might still be around town, haven't spoken to the neighbors yet, and he could (legally) enter the house in the interim and (illegally) do lots of damage.

Thanks for all your help guys, the atty was in court yesterday and today but his secty says he'll call me on Friday.

dealmaker

[Dan Auito]

Keep us posted! :SM005:

[RosewoodTx]

Hey Dealmaker,

Is this property located in Texas?

How're things progressing?

Just curious. Good Luck!

[dealmaker]

Hi Rosewood/Elkizabeth;
I sent you a PM but realized that I sent it a day too early, please wait to tomorrow to read it, LOL.

Yep it's in Texas, the Hill Country to be exact.

The progress is pretty much like me last post except I'm starting to wonder if I feel up to doing the work on this pig along with whatever work I have to do on the (other) one that I'm foreclosing on. It looks like my borrowers there are going to go right down to the wire on getting out, and I'm sure it's not in as good shape as when I sold to them 2 years ago. I'd really rather be playing golf than fixing and cleaning.

I have a call scheduled with my attorney for tomorrow AM and I'll see what he has to say then.

Sheesh, a week ago I was in Colorado skiing in 25 degree weather, today I get home and it's pushing 80. Goodbye snow skis, hello golf clubs.

dealmaker