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REAL ESTATE Home owner deceased, huge 2nd mort, 1st FC-ing..next step?

ryanpal

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Jul 26, 2007
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Hello everyone.

Here's the following scenario:
Home owner deceased.
1st mort - 81k (Wells Fargo)
2nd mort - 361k (Wachovia)

The 1st started to foreclose 11/06/07. The 2nd started to foreclose 12/3/07. The sale is scheduled for next week. The son of the deceased is the executor of the estate in which I'm trying to locate. What's the next step to take? It doesn't seem that this falls under a regular short sale because the owner is deceased and the heirs seem to not have any interest in it. Therefore the usual hardship letter etc. wouldn't have much of an affect since it's not the primary residence (or would it?).

A few questions...
-Do I need the exectutor on board?
-How should I pursue...try to get Wachovia to take pennies on the dollar?
-Should I structure this like a short sale or just try to purchase the 2nd mort from wachovia?

any other info that is missed would be appreciated.

thanks,
Ryan
 

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kurtyordy

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Aug 28, 2007
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what is the FMV? If there was enough room, I would buy the second, go to the auction, bid up until I was 'in the money' to protect myself, and then take a quick profit
 
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ryanpal

ryanpal

Contributor
Read Millionaire Fastlane
Jul 26, 2007
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the FMV is around $315k. i'm not sure how much the repairs are and actually...what repairs are indeed necessary. it's been vacant for a year so i can imagine there's a good amount. it looks like this is an upside down property.

you mention to buy the 2nd...you don't mention how much. am i looking for less than .50 on the dollar considering its vacant, needs repairs, etc. or will they not care and feel i'm trying to lowball? i haven't read much on wachovia with short sales but i have read that ones with CW are tough.

also, should i'm in the process of hunting down the executor (one of the heirs)...should i even bother or just negotiate with the bank?

ryan
 

kurtyordy

Bronze Contributor
Aug 28, 2007
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I sent you a pm. If 1st is 81 and the fmv is 315, there seems to be a lot of room play.

A couple issues- if you go my first suggest route, you will typically need to bring to the forclosure sale enough cash to protect yourself. In other words, 81k + whatever you pay for the second.

The other option is to secure the second and then offer to buy property from seller for quitclaim. Now you own, you can stop foreclosure. The only difficulty here is motivating the heir to sell if they do not care about the property.
 
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ryanpal

ryanpal

Contributor
Read Millionaire Fastlane
Jul 26, 2007
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ok looks like im going to call wachovia.

never done this route before so anyone have any insite as to what i should say?

"hi my name is ryan and i'm calling in regards to the loan made on property XYZ. would you please forward me to the department handling this loan which is in default"

-assuming that is correct..once connected to proper person.

"hello my name is ryan and i'm trying to get you paid on the loan made by mr smith on property xyz. i purchase notes at a discount and would like you to foward me the proper paperwork so i may submit my offer"?

is that right? any info is welcomed.

ryan
 

tbsells

Contributor
Jul 27, 2007
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Ohio
They won't talk to you at all without signed authorization from the borrower. I know this sounds stupid.....as the borrower is deceased. But, they won't talk to you without it. I would find out who the estate attorney is, express your intentioins to him/her and see if he/she will authorize you to speak to the lender. Alternatively, you could make your offer through the estate attorney and see if they would help negotiate with the lender. It is possible that you may be a solution to a problem for the lender and the attorney and they may be very eager to assist you. The worst they can do is say no.
 

kurtyordy

Bronze Contributor
Aug 28, 2007
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Well, as you know, I outsourced this function, and I still think you should, but that being said.

You want to ask for the loss mitigation department.

You are an investor that invests in high risk defaulting loans. One of their loans was brought to you attention, and you would like to speak to them about purchasing this note from them.

Them- Which loan is it?

You- it is Mr. Daisypusher at 6 Pinebox Rd.

Them- Do you have an Authorization to Release Information.

You- No, the borrower is in fact deceased which makes this loan even more difficult. I am willing to accept it as is without the information being released to me before purchase.

Them- Well it is against protocol.

You- I can have the funds wired to you by Tuesday of Next week.

Them- How much?

You- 7,245.

Them- aahfgkjkjrf, call 911, clear tzzt, ok we have a pulse back. The lowest we can go is 225,000.

You- that is unfortunate. The foreclosure is next week, and I was thinking we could work something out. I will call you after lunch with my best offer, but based on the market conditions, 225,000 is way too high.

Them- ok, after lunch then.

You(after lunch)- ok, I spent the last 4 hours crunching the numbers on repairs, and doing comps over again. The very best I can offer is 42k.

Them- Can you make 87k If you make it 87k, we can wrap it up.

You- I can wire you 70k tomorrow if you give the ok at 70k.

Them- alright.

Others may have a different approach. I successfully did this myself once, and found it to be a huge P.I.T.A, so that is why I outsourced it.

-do not mention that you buy at a discount. This will be obvious when they see your offer.
- even though this is your first crack at it, make yourself sound like a pro.

You are investor, you do not care about whether or not they get paid, and in reality the person you will be talking to does not really either. You care about investing period. This person cares some about reducing (mitigating) loss for the bank, and getting this case out of thier workload. That is what you are selling to.
 

kurtyordy

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tbsells- that is exactly why outsourcing is so powerful. There are buyers out there that already have a buying relationship with Wachovia, and due to that relationship, they often can circumvent the authorization.
 
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ryanpal

ryanpal

Contributor
Read Millionaire Fastlane
Jul 26, 2007
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thanks for the responses guys.

one thing that im surprised at is the fact that i would need an authorization to release form. i thought that is only if i was helping the homeowner reinstate the loan, to obtain pay off amounts on their behalf, or to do a short sale.

since i want to purchase the note...i still need an A2R?

i know REIpro (david and stacy) purchase 2nd mortgages. one of their tactics is to purchase the 2nd and then contact the homeowner after. obviously this is done w/out an A2R...what am I missing/misunderstanding?
 

tbsells

Contributor
Jul 27, 2007
304
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Ohio
I don't know for sure what others do, but...........I'm thinking Reipro probably buys privately held second mortgages from people. I hold a couple mortgages and get offers to buy them periodically. This is alot different than dealing with a huge multinational conglomerate like Wachovia. When they sell their mortgages they are likely to be in huge multi-million dollar batches sold to Wall Street companies-hedge funds, pension funds, insurance companies, etc. I doubt one guy trying to purchase one loan at a discount will get anywhere without authorization to release information from the borrower. This will probably be seen in their eyes as a short sale. You are seeing it as a note purchase. I doubt very seriously if they are involved at all in selling loans on an individual basis. I don't want to discourage you and I could be wrong. But, I've done alot of short sales and it sounds to me like that is what you are trying to do. Think about it, essentially you want to pay off a loan for less than what is owed on it-a short sale.
 

kurtyordy

Bronze Contributor
Aug 28, 2007
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Actually Stacy is the one that referred my to the person that buys the notes for me. These are not private mortgages, they are conglomerate banks, but like I stated above, they have a track record and relationships with these folks.

My advice would be, if you really want to do it yourself, go for it using my script above, or a version of it, and bluff your way through. The two worst case scenarios are that either the just say no, and you have to find another deal, or your numbers are off, and you jump in upside down. The second you control, the first is no big deal because deals come down the road every minute of every day.
 

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tbsells

Contributor
Jul 27, 2007
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Ohio
Kurt,
How would you "outsource" this process. I understand the concept of outsourcing, just not as it relates to this topic. Are you talking about having an agent, attorney or some other party represent you in the negotiations? Do you know someone with an established buying relationship who could cut through some of the red tape? Are their companies that do this on behalf of investors for a fee? I'm curious. Sounds like a good idea.
 

kurtyordy

Bronze Contributor
Aug 28, 2007
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PA
I am glad you asked. Kurts note buying service is now in business. Just kidding. Stacy introduced me to a woman who would negotiate with the banks, and take care of the details such as where to wire the money, getting the package asigned to my company, and so on. I told her the info I had, the amount I wanted to pay, and she went to work. She would also bring me deals occasionaly, and she negotiated short sales for me as well. Quite a nice system actually. Not sure if she is still doing it since I am no longer pursueing that investment direction.
 

tbsells

Contributor
Jul 27, 2007
304
57
31
Ohio
Thanks for the info, Kurt. That really sounds like a good business model. I think I'll look into it further.
 

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