Foreclosure is imminent.

[Milkanic]

Get a consult with a bankruptcy lawyer. If your moms credit is already ruined, it may make sense to just stop paying and get a clean slate (or re-negotiate the loan terms).

 

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[WJK]

I'd like to preface what will be a rather desperate and negative post with some positivity.

Anybody got an idea of WTF I should do?

I am a professional real estate investor, hard money lender and I've been in real estate for 41 years. You are between a rock and hard spot. There's no way for you guys to save the house. Facts are facts. You have no real equity position (1.4 - 1.15 - costs and back payments = zip or a negative number). If I was you, I'd drop the price and sell it ASAP -- just hoping to break -- even while I would keep talking to my lender step by step. Refinancing isn't an option. You and your mom can't qualify because of your lack of equity, and you can't make the payments as it is. Call your dad and see what he says. Will he help you? If nothing else, give the house back to the hard money lender -- a deed in lieu of foreclosure. The sooner you guys get out of there, the better. Those types of situations consume all your life's juices. Get up, brush yourself off. Find another place and another way to live. It's sounds like you guys are going to do some serious down sizing. Have an auction with all the personal property in the house to raise some cash for your move. You're NOT going to need 99 % of all of that stuff for your new life. You're biggest problem is going to be your mom. I bet her ego and self-image are all tied up with that big house and that lifestyle she had with your dad...

 

[G-Man]

Geez dude, you got put on the bullet train to manhood.

@SteveO

 

[lowtek]

@MidwestLandlord

I would suggest making an account over at the deeper pockets forums. It's to real estate what this forum is to entrepreneurship. The experts over there may have some deeper insights.

If you had to refinance it, is it in a location where you could AirBNB/VRBO it out? Not a solution, but maybe a band aid to reduce the sting of the payments

 

[jon.a]

Here's my take...

Your family is not qualified to own this house. To be more blunt your family doesn't deserve this house.
I don't remember in this or the other thread hearing how you came to own it.
Something feels disingenuous in the story. I'm guessing maybe a divorce. It doesn't really matter.
You seemed to think you had hit the jackpot. Well, now you're the dog that caught the truck and doesn't know what to do with it.
You need to find someone who is qualified to own this house. YOU are going to have to take the hit in the deal not them.

 

[G-Man]

You're exactly spot on. Without going too much into the details - although she is no longer really in her depression like she was before - she's completely delusional in many aspects and often acts quite psychotic. It makes it very very hard to get this all sorted out. At times it gets unbearable but things are definitely improving.

I really respect that you have such a deep sense of responsibility for others. It's uncommon even in people twice your age.

That said: You're attempting to shield other people from that hostile bitch called "Reality". You can't do it forever. You are most likely going to lose this house. You can either take the initiative, sell and move on, or you can keep playing the role of band leader on the Titanic.

I think you'll find it oddly relieving to just take it on the chin and move on. I think you might even be surprised by your family. People often become calmer and more rational when there's no longer any way to prop up the un-reality. That constant anxiety you've all been feeling for years might even go away.

 

[MitchM]

Google "how to get cash for keys" you'll get some ideas.

Thank you. Looking into it.

I meant disingenuous as an incomplete story, not as lying.

Gotcha. Sorry I got defensive.

I Reread your other posts and not sure why you keep saying 'we'. Your money is gone and this is your parents and now step-dad's issue to figure out.

Get far away from your parents for a year or two and spread your own wings. This is not your problem.

I've been working on my business while staying here and helping her. I have learned more in this process than I ever have before. I don't feel as though I am stunting my growth - although I have made mistakes in overreaching that I wish I had not (such as putting all of my money into this...) This will be over with soon, whether it ends well or not.

I just fundamentally disagree that it's not my problem. Having a strong family is one of my highest values. Even though the money is F*cked I feel like my efforts have paid off. I made naive decisions that I have learned from and I understand that if someone is drowning it is better for one person to drown than for both to drown.

It seems like there should be an awful lot of lawyers involved and there are...none? It sounds like your (step?)father bought an expensive house and was able to walk away in the divorce without having to pay alimony, child support, and there was no disposition of property. Either there is a lot missing from the story or both parties in the divorce need to sue their attorneys for malpractice.

You really really really need to speak to lawyers: the divorce attorneys on both sides, a BK attorney and/or a real estate attorney. You might want to look into conservatorship of your mother's affairs as well, because it doesn't sound like she can take care of anything. I'm surprised your father has had zero interest or financial or other responsibility in all of this, especially since your mother isn't well.

I admire you for wanting to keep your mother out of homelessness, but there is a huge range of living situations betweens a 2 mil home and the gutter, and I don't see why you can't rent a small house to share.

My father bought the house when I was 3. They divorced when I was 10 or so. The truth of the matter is that my father left my mother with plenty of assets (rental properties) and she could have sold the house earlier if she had wanted to.

Slowly the rental properties started being sold off due to reasons that I won't get into. She started off with 17 after the divorce, and now she has zero. The mistakes really are on her shoulders, which is the part that makes this such an emotional burden for her.

I shouldn't have ever tried to save her with my money. That has made it even worse for her because of the incredible guilt she feels. If we foreclose that will surely weigh heavily on her heart. She's a kind and compassionate person but she was never the money maker. Her incompetence shined through and now we are here. She's learned a lot and has been humbled by the experience. We are all going to step out of this stronger - regardless of how much money is left.

I may sound like a weak pushover who needs to stand up for himself, but I have learned to draw the line and put myself first. Remember that coming out of this with a sale means I get some of my money back.

 

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[ZCP]

The real issue is that my mom has no idea how to handle money and doesn't work. Or were you alluding to something else?

Correct. Do not lose sight of correcting the REAL problem.
This is like a liver transplant for an alcoholic.
Quit living in the past and figure out how to give her a future.

 

[MitchM]

So I'm way late. What ended up happening? I'll post my thoughts for others in a bad situation.



Remember Realtors just want to make money. They will always operate that way. Bankruptcy would be a good option. But that's next quote.


What did the lawyer say? BK wouldn't have fixed your problem BUT it would have held off things like the crazy $600 a day fees etc. while you fix your problem and sell the house or something. The Courts wouldn't allow you to be completely raked over the coals (I'm not an atty but have helped many save their homes)



This! If they wanted the house you could have offered to give the keys back with full forgiveness of debt. Even if you were underwater.

Curious what ended up happening. I'm sorry about your brother. We just lost someone close to the family to drugs.

Thanks for reaching out and taking the time to comment! Thankfully everything has vastly improved. My mother had to file bankruptcy and we ended up having to vacate the house on like a weeks notice.

Things got hairy and complicated and my mom lost basically everything and I am still not sure if I will be getting any of my money back (we will know in a few weeks).

My brother is doing better though... he has been sober since he totaled his car earlier this year and ended up with a DUI. That was pretty scary.

The storm has essentially passed - my dad is giving shelter to both my mom and brother and I have decided to stay with him as well to help around until I move somewhere at the beginning of next year.

It feels good to finally have normalcy and not be stressing about my mom and brother all of the time while trying to grow my business!

Sure, I still worry about them at times, but they are doing so much better - now I feel I can turn my mind off and relax when I want to

Thank you for asking!

 

[ljean]

Have you attempted to contact your lender and explain the house is for sale? I doubt they want the house any more than you do.

 

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[ZCP]

Save the house or not..... still doesn't fix the real issue......

 

[MJ DeMarco]

The issue with #2 is that even if we drop the house's price aggressively we aren't guaranteed to sell it within that period - and from my understanding dropping the price of the house will make the LTV way too high for someone to refinance us. This is assuming that they will look at the current price of the house to assess whether or not the loan is worth it for them. Can anyone contradict this?

Huh? If you sell the house it's none of your business how the new buyer acquires the money.

If I buy this house (because it's a good deal and undermarket) I'm paying cash. You get the loan paid off and go on your merry way. I don't give a shit about LTV. And if you're selling cheap/undermarket, LTV is not a problem because the appraisal will come in higher than the selling price.

Ultimately it is up to my mom who is more interested in refinancing

LOL. Your mother has no business being in the house. That's the problem here.

Sell the damn house. A property in the luxury market will STILL sell as long as it is priced aggressively. If you're being honest about the home's market value being near $2M, it will sell fast at $1.4 or 1.5. Sell it and pay off the damn loan.

I see absolutely no issue or problem here -- just an inflated ego and lot of f*cking stubbornness from someone who *thinks* they can live in 10,000 square foot McMansion. I feel bad for you man having to manage this shitshow.

 

[MitchM]

I'd like to preface what will be a rather desperate and negative post with some positivity.

Yesterday marked 1 year of being on this forum. I had planned to make a big post about how my life has changed since joining the Fastlane community, and I will still do that - because my life HAS completely transformed for the better...

About 10 months ago I posted this thread about how F*cked my family was. My mom had been in bed on and off for years in deep depression. My little brother had been abusing drugs and essentially making our lives hell.

The single greatest pride in my life is that I stuck with them and they are now doing much better. Learning how to actually be of service to them has been the single greatest lesson of my life and it has truly been a case of your greatest obstacles are your greatest opportunities for growth. I don't want to go into too many details here, because I want to post more about it later and this post isn't about that. I just wanted to show that not everything is bad

Also, I'll be launching my first product (not my first business attempt) that I have poured my heart and soul into next week... Just one year after starting this journey. How great is that?

---------------------------------------------------

Anyway, here comes the negative side of things. My house - my Mom's house - will be going into (pre) foreclosure in three weeks and I want to prevent her from losing everything.

If you are the type of person who is into seeing things that are kind of sad - then you should check out this post that I left in February this year - thinking that we were about to make 800k in capital gains

Needless to say, this didn't happen and things have gotten increasingly desperate.

Her house is worth $2 million and houses in that price range don't move quickly. Some terrible financial decisions were made in the form of hard money loans where she was stuck paying 10-12k a month on the house. Now, we are at the end of her loan and she owes $1.15mil.

We also have moved the house's price down several times because we knew we really needed to sell it before the end of the 12 months (Dec 5th). I believe that this may have damaged the perception of the house.

There is so much information and context that I want to provide right now but I fear that I won't be able to do that without making this post too convoluted - so I am just going to stick to

the basics:

a) My mom owes $1.15mil on the house and because we haven't paid the loan it is costing $600 extra every day that we don't pay it.
b) If we get foreclosed on there is an extra charge of $150,000
c) The house is now priced at $1,699,000. (started at 2 million)

Our options (from what I understand):

1) We get the house refinanced through a hard money loan (my mom's credit is completely F*cked). It will cost us $100-150k out of closing of the house... and obviously we aren't guaranteed to sell it before the loan closes - putting us back in this situation but even worse.

2) Drop the price aggressively (to around $1.4mil) and try to sell in the very short window that we have.

- The issue with #1 is that we are stuck in this house (which has become extremely oppressive) even longer... and we aren't guaranteed to make it out of this with a sale. We could end up in even deeper waters!

- The issue with #2 is that even if we drop the house's price aggressively we aren't guaranteed to sell it within that period - and from my understanding dropping the price of the house will make the LTV way too high for someone to refinance us. This is assuming that they will look at the current price of the house to assess whether or not the loan is worth it for them. Can anyone contradict this?

If we drop and sell it for $1.4 in this period of time then that will mean that selling it refinanced for $1.5-1.6 would make it worth our effort to refinance it. I think there is a fair bit of certainty that we could sell for that price, but of course... you never know.

What I really want to know is how to find people who will buy this house at $1.4mil quickly - without dropping the marketed price of the house (which would ruin our chance of refinancing as a backup). Are we just going to have to go balls to the wall on one of these options?

If I had to pick I would say sell it fast and drop the price because I want to get out of here but I feel that may be even more risky than doing a refinance. To me it would be optimal to leave the public listing at $1.699 for the sake of re-financing, but still somehow bring investor's attention to this house at its current price point (meaning they know we will sell for much less than it is worth).

-----------------------------------------------------------


Just to add a little bit of oxygen to the fire I'll add that I have given all of the money that I've made and my college funds to try and help this situation. I now recognize that I went way too far in trying to help, but I loved my mom too much and didn't have the wisdom at the time to say no.

I now understand where the line needs to be drawn. You must insure that you are taken care of so that you can best be of service to others. These lessons are invaluable to me and I honestly wouldn't take any of my decisions back. If you wish to judge me as being an idiot for doing this - then that is okay - the main thing is that I need to make this happen so that my mom can land on her feet and maybe I can get some of my money back.

--------------------------------------------------------------

I appreciate your time in reading this. Sorry if some areas aren't clear enough. I will go back and fix things up when I get the chance.

Well, I guess my final question is -

Anybody got an idea of WTF I should do?

 

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[SteveO]

What is stopping it from selling? It is usually price.

Can you find the local real estate investment club? They would probably be able to give you solid feedback. You would need to filter their thoughts as they are interested in making money. You might be able to find a better hard money lender there. @JScott is a hard money lender. He may have some advice.

 

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[ZCP]

do a 5 day sale. (get the book)
bake cookies and clean the place up.
really, aggressively push the walkthrough day.

sounds stupid, but it works and might be the hail mary you need.

Good luck!!

 

[mThree2K]

Be prepared, because even if you work out a solution for her situation it seems like she will stand in her own way when it is time to wrap this thing up and say good bye to the house.

The whole refinance thing sounds like just another try to keep things like they were before, nonsense, the harsh reality is different.

I'm sorry for you buddy because you still hope to get some of your money back, and I hope that you somehow will, but this will be utterly difficult as buyers in this price range usually smell when there is blood on the streets.

You just have 2 weeks left meaning you have to go down to bargain niveau regarding the sell price



Enviado desde mi Mi Note 2 mediante Tapatalk

 

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[jon.a]

@JScott
@JustAskBenWhy

 

[MitchM]

Have you attempted to contact your lender and explain the house is for sale? I doubt they want the house any more than you do.

Sadly, our lender wants the house. They knew it was for sale when they made the loan and the contract with them was hardly reasonable. I don't want to go too deep into this, but if the lender gets possession of our house they won't have any problems recouping their investment (and then more).

Keep in mind that they wouldn't be nearly as pressed for time as we are if the house came into their possession (and they would only need to sell for $1,150,000).

 

[jon.a]

@MidwestLandlord

I would suggest making an account over at the deeper pockets forums. It's to real estate what this forum is to entrepreneurship. The experts over there may have some deeper insights.

If you had to refinance it, is it in a location where you could AirBNB/VRBO it out? Not a solution, but maybe a band aid to reduce the sting of the payments

www.biggerpockets.com

 

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[MitchM]

@MidwestLandlord

I would suggest making an account over at the deeper pockets forums. It's to real estate what this forum is to entrepreneurship. The experts over there may have some deeper insights.

If you had to refinance it, is it in a location where you could AirBNB/VRBO it out? Not a solution, but maybe a band aid to reduce the sting of the payments

Going to this website now. Thank you.

 

[MitchM]

What does your Realtor have to say?

Our realtor wants to drop the price as soon as possible. My issue with this is that it leaves us no exit if we don't sell. It really is all or nothing either way. It pains me because I know for a fact that if we had time we could let go of this house for its legitimate price, but obviously we must act soon.

Ultimately it is up to my mom who is more interested in refinancing, but I want to get as clear on this as possible before we move forward. What I am mostly hoping for is to find an avenue that will allow us to push the house aggressively without changing the listing... I just don't even know if this is possible.

 

[MitchM]

Here's my take...

Your family is not qualified to own this house. To be more blunt your family doesn't deserve this house.
I don't remember in this or the other thread hearing how you came to own it.
Something feels disingenuous in the story. I'm guessing maybe a divorce. It doesn't really matter.
You seemed to think you had hit the jackpot. Well, now you're the dog that caught the truck and doesn't know what to do with it.
You need to find someone who is qualified to own this house. YOU are going to have to take the hit in the deal not them.

I'm well aware that we are going to have to take the hit. I sank all of my earnings to help my mother and wouldn't even care if she sold the house at break even. I have no control over her willingness to let go though. All that I can do is ease the pain in the process for her.

You're right. We are not deserving of the house in our current state. I'm too inexperienced and my mother has been unemployed for years. My father was "deserving" though. Good guess on the divorce. However there was nothing disingenuous about my story.

 

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[rollerskates]

It seems like there should be an awful lot of lawyers involved and there are...none? It sounds like your (step?)father bought an expensive house and was able to walk away in the divorce without having to pay alimony, child support, and there was no disposition of property. Either there is a lot missing from the story or both parties in the divorce need to sue their attorneys for malpractice.

You really really really need to speak to lawyers: the divorce attorneys on both sides, a BK attorney and/or a real estate attorney. You might want to look into conservatorship of your mother's affairs as well, because it doesn't sound like she can take care of anything. I'm surprised your father has had zero interest or financial or other responsibility in all of this, especially since your mother isn't well.

I admire you for wanting to keep your mother out of homelessness, but there is a huge range of living situations betweens a 2 mil home and the gutter, and I don't see why you can't rent a small house to share.

 

[Niptuck MD]

where in atl is the property located? I have a connection that can be of immediate help she Specialized In higher priced homes

 

[LightHouse]

2 things

#1 to answer your question from the original post. The refi is based on appraised value not selling price, have you had any recent apprasils on the property? What does your local govt think it's worth(tax assessment value)?

#2 what kind of answers are you looking for here? You are putting a lot of your personal story out there, but it's all noise. We want to help but you need to get to brass tacks here. What's your 1/3/6 month plan and goals at this moment?

 

[biophase]

Correct. Do not lose sight of correcting the REAL problem.
This is like a liver transplant for an alcoholic.
Quit living in the past and figure out how to give her a future.

So what's the difference between letting it go into foreclosure and selling at $1.2 and breaking even?

You still seem to think that you can sell and get some money from this. I see it as a lost cause. You are not going to find a buyer and close before your HML forecloses. What is this $150k penalty? And who owes it if it is foreclosed? How is this enforced? Obviously, if your mom can't pay the loan, she can't pay the penalty.

I just don't see refinance as an option at all, even with another HML.

 

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[MitchM]

What is stopping it from selling? It is usually price.

Can you find the local real estate investment club? They would probably be able to give you solid feedback. You would need to filter their thoughts as they are interested in making money. You might be able to find a better hard money lender there. @JScott is a hard money lender. He may have some advice.

Yep, to sell it quickly we would certainly need to drop the price. Houses at this level generally take about 2 years to sell. We have only been on the market for 10 months and couldn't really afford to be on for longer.

My concern is that if we drop the price now, we may not sell it and then we certainly won't be able to refinance. We are going to have to place our bets on either refinancing or on selling quickly. I'm leaning towards selling quickly but was and still am hoping that I can find a compromise.

A local investment club may be a good way to find this compromise. Thank you!

 

[MitchM]

Have you looked at what has sold recently in your price range and how your house compares?

Yeah - at this new price point we are competitive with houses that are 5k sq ft less than ours. It is about 14,000 sq ft. Obviously to sell it quickly we are just going to have to let it go for a fraction of what it is worth.

 

[ljean]

I was reading an article recently about how people generally dont want these sort of huge houses like they did 10-20 years ago. And the proposed tax laws really hit them hard with the new property tax and mortgage interest deduction caps.

 

[ljean]

You need to get it sold to a typical home owner. A bank isnt going to refinance it, an investor isnt going to buy it. Even if you were to refinance it, you are looking at a fortune in closing and holding costs. Drop the price every week until you get an offer and sell it.