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Category Archives: Vassar

The Verdict Is Finally In

Update: The bank accepted my counteroffer!!! I must say I’m a bit surprised they went for it but given the current foreclosure climate, it makes sense to just take a loss and move on than to keep dragging it out. I have until July 7th to close.

I’m funding this deal using an equity loan on another property. This loan process has been more stressful for me than the short sale if you can believe it. It’s been three months since I started the process and up until this morning I was still unsure if and when the loan would actually close.

Long story short, I had the worst loan specialist working on my file. She would never answer or return calls. She would only respond to emails when she felt like it. Early on I lost my patience with her and reported her to her boss. He promised to personally oversee the processing of my loan and would make sure to expedite it. Needless to say, he didn’t.

After hearing that the bank accepted my counteroffer, I called the bank to get a final answer from someone as to the status. Turns out that both my original loan specialist and her boss have since left the company, even though I had just received an email from her last week.

I have a new loan specialist who apologized and assured me that we should be able to close before the end of the month. Yay!

 
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Posted by on June 5, 2011 in Vassar

 

Counteroffer In

Yesterday we received the counter offer from the bank for $51K. Considering that the current loan balance is around $60K, that isn’t much of a discount. Certainly not enough to justify the trouble of a short sale. I countered at $40K which is the most this deal will bear. Let’s see what happens.

 
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Posted by on May 5, 2011 in Vassar

 

Slow Going

Been a while since the last update on the Vassar property. Sadly, it’s because there isn’t much to report. The contract has been submitted to the bank and we’re waiting on their response. Hopefully they will just accept my offer and we can move forward. If not, we’ll either have to renegotiate or just walk away. Only time will tell.

 
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Posted by on April 29, 2011 in Vassar

 

Short Sale Circus

So my blog was deactivated for about a day for linking to an external site. Sorry to anyone who received the error page. Fortunately I’m back up and running.

The short sale for the Vassar property has had a lot of ups and downs in the past two days. At one point we were going to just drop the short sale altogether because the realtor was told the balance was lower than expected. We just confirmed (because it is what I was asserting all along), that the balance is much higher.

Here are the numbers for Vassar:

After Repair Value: $80K
Repairs: $20K
Balance reported by Realtor: $30K
Actual balance: $60K!

The original principal loan amount on this house was for $35K in 1999. The current balance is $60K. Yes, that means that after 12 years of payments, they now owe almost twice the original loan amount! They have faced foreclosure a few times in the past and the accumulation of legal fees, penalties, and back taxes has amounted to about $25K. These are the kind of situations that make people just walk away from their homes – it’s just hopeless and there is little incentive to keep making those payments.

This is why short sales exist. They allow a homeowner to sell their house for less than the full balance. This way, the house can still be sold to a willing buyer and the bank can recoup some of their investment. Even this, however, is deceptive. In reality the bank has already recouped their investment through interest. In this case for example, even if the Vassar homeowners only made 80% of their payments in the past 12 years, the bank would have collected over $40K in interest payments. Anything they recoup from the existing balance now would be gravy.

Problem is that short sales are a pain. The bank wants buyers to jump through all kinds of hoops and they make the process very difficult. You also need cash. This is why it helps to have a private lender on your team. It’s really a win-win situation with a private lender: I get access to quick cash with limited hoops to jump through, and the private lender gets a great return on their money secured by real estate. (More on private lending soon.)

For now, we will proceed with the short sale and see if the bank accepts my offer or counteroffers. I also need to talk to a mortgage broker about a HUD no-seasoning non-cash out refinance program (doesn’t exactly roll off the tongue does it?).

 
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Posted by on March 26, 2011 in Vassar

 

Lower Balance Than Expected and P90X

So today the realtor told me that the balance of the loan on Vassar is less than I thought – $20K less. This is good news. It means the bank may be more inclined to approve the short sale since my offer isn’t too far off from the balance. It also opens a few more possibilities for this property if the short sale doesn’t go through. Hmmm…. gears are turning…

In other news I started P90X today and I didn’t hurl so I’m pretty pleased with myself. So what if I only got halfway through the workout and couldn’t get back up!

 
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Posted by on March 23, 2011 in Vassar

 

Vassar Update

Looks like I found a realtor for the short sale. So far she has contacted the bank and is meeting with the seller tomorrow to sign the representation agreement. Technically she will be the seller’s agent but I don’t see that being a problem. She says that her fee will be paid by the bank from the sales price. We’ll see how the sales price changes once she is involved. I will only be able to see what her fee is once I get the HUD statement. Hopefully it won’t become a subject of dispute but I suppose it is a possibility. I certainly don’t want to see a 3% increase in my price because of her involvement.

She also said that I might need proof of funds soon. That might be a problem since the loan isn’t likely to close until a few weeks. I called the bank regarding the investment property loan and some incorrect information on the disclosures. They said to just make the corrections, sign and then submit. They can process from there. I’ll have to stay on top of them to keep this thing moving ASAP.

 
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Posted by on March 19, 2011 in Vassar

 

My First Project and Funding Partner

So the first project is on Vassar. It’s a short sale which is new to me. So far I’ve prepared the short sale package and submitted it to Citimortgage. This was about two months ago. They have a third party who processes their short sales, National Quick Sales. They told me a realtor has to be on the transaction so I had to find one willing to work with me. I hired and fired one already (more on that later). I then contacted an old acquaintance who left the company I work for to become a realtor. She said she’ll look over the transaction, call the bank, and then let me know where we have to go from here. I really don’t want her to do too much until I know what she’ll charge me. I’m open to a flat fee arrangement, but certainly not commission. We’ll see.

The greatest hurdle for any aspiring rehabber is finding money. Many work with hard money lenders (HML) or through conventional lenders, but the crown jewel is having a private lender since they can move faster and often offer better rates. I’ve had the good fortune of finding a relative as a private lender, or as I like to call them, a funding partner (has a warmer tone to it). This arrangement however is a little unique. The funding partner has neither cash nor credit, but she has a free and clear property. Last year I was added to the deed so that I could borrow against the equity in my own name. I am currently awaiting the bank disclosures for the loan. This is how I’ll finance the Vassar short sale. I just hope the loan closes before the short sale does. Otherwise I’ll have to make short term financing arrangements.

Future post topics:
– Butt-dialing realtor
– Rehabbing philosophy

 
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Posted by on March 17, 2011 in Vassar