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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: help with this loan on a preforeclosure Posted by damien on October 24, 2003 at 5:19 PM In Reply to: help with this loan on a preforeclosure posted by Tom on October 24, 2003 at 4:30 PM : I need advice to see if this deal structure is feasible and for all intents and purposes ok with Mr. government. : Here's the deal: : home worth 240,000 : 1st of 180,000 : 2nd of 10,000 : foreclosure in 12 days : arrearage total 8,000 : homwowner wants to stay in the house and says he has the money coming in 18 days (I'll be verifying if that is true of course) to reinstate the 8K. He wants me to loan him the money to reinstate (actually I'll pay the fees directly to the bank to make sure the funds get there) and in return when his money arrives, he'll pay me back the 8K plus 5K in 30 days. : I told him that for me to do this I would have to have a means of recouping my money if he didn't pay me back. So I told him that He would need to deed me the property and then I would reinstate the mortgages and secure my interest with a 3rd mortgage (which really has little power) with some sort of 30 balloon (not sure how to do this). : If he got his money and paid me on time (which I told him that the rules are strict and if he's late....he's late...too bad) I deed the property back to him. If he doesn't pay, we evict according to the law. : The homeowner understood what I proposed and knows the consequences. HERE'S MY QUESTIONS: : 1. Is this on the up and up as far as a private loan goes or is there a usery law issue (or something like that that's ringing in my head) that limits the amount of return on a hard money loan like this. : 2. What are the best documents to secure this deal as far as the private loan goes (promissary not? )? I've done plenty of sub 2's...no problem there. : 3. Is there a specific way that I would word it in the loan docs that he gets the deed back upon complete and full payment of the loan from me or we get to evict? : Any other thoughts on this? : I'm just want to make sure this is on the up and up and that I'm not missing anything! : Thanks : Tom Tom, Assuming your property is in CA, you can not legally have the homeowner deed the house to you for a loan. You would be giving the homeowner a covered loan, (AB489) that would be secured with a Trust Deed (3rd mortgage). This loan can be short term, but can not call for more than a certain amount financed into the loan. As an unlicensed (assuming) broker you are subject to lending laws regarding interest. My suggestion to you is, do not make the deal for 2 reasons. 1. If the property is worth $240K then you should not finance a deal that has more than $168K in outstanding loans, including balance, back payments, and taxes. This loan has to high of a LTV to consider you could end up taking a loss. 2. You don't seem to know allot about making loans to homeowners, nor the laws designed to protect the homeowner, therefore you could be setting yourself up for legal action should the homeowner default and you are forced to foreclose. Hope that helps, Damien www.888wcps.com Follow Ups: LOAN OFFER MRS MARY BLAIR 7:54 AM, 12/02/06 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : I need advice to see if this deal structure is feasible and for all intents and purposes ok with Mr. government. : : Here's the deal: : : home worth 240,000 : : 1st of 180,000 : : 2nd of 10,000 : : foreclosure in 12 days : : arrearage total 8,000 : : homwowner wants to stay in the house and says he has the money coming in 18 days (I'll be verifying if that is true of course) to reinstate the 8K. He wants me to loan him the money to reinstate (actually I'll pay the fees directly to the bank to make sure the funds get there) and in return when his money arrives, he'll pay me back the 8K plus 5K in 30 days. : : I told him that for me to do this I would have to have a means of recouping my money if he didn't pay me back. So I told him that He would need to deed me the property and then I would reinstate the mortgages and secure my interest with a 3rd mortgage (which really has little power) with some sort of 30 balloon (not sure how to do this). : : If he got his money and paid me on time (which I told him that the rules are strict and if he's late....he's late...too bad) I deed the property back to him. If he doesn't pay, we evict according to the law. : : The homeowner understood what I proposed and knows the consequences. HERE'S MY QUESTIONS: : : 1. Is this on the up and up as far as a private loan goes or is there a usery law issue (or something like that that's ringing in my head) that limits the amount of return on a hard money loan like this. : : 2. What are the best documents to secure this deal as far as the private loan goes (promissary not? )? I've done plenty of sub 2's...no problem there. : : 3. Is there a specific way that I would word it in the loan docs that he gets the deed back upon complete and full payment of the loan from me or we get to evict? : : Any other thoughts on this? : : I'm just want to make sure this is on the up and up and that I'm not missing anything! : : Thanks : : Tom : : Tom, : Assuming your property is in CA, you can not legally have the homeowner deed the house to you for a loan. You would be giving the homeowner a covered loan, (AB489) that would be secured with a Trust Deed (3rd mortgage). This loan can be short term, but can not call for more than a certain amount financed into the loan. As an unlicensed (assuming) broker you are subject to lending laws regarding interest. : My suggestion to you is, do not make the deal for 2 reasons. : 1. If the property is worth $240K then you should not finance a deal that has more than $168K in outstanding loans, including balance, back payments, and taxes. This loan has to high of a LTV to consider you could end up taking a loss. : 2. You don't seem to know allot about making loans to homeowners, nor the laws designed to protect the homeowner, therefore you could be setting yourself up for legal action should the homeowner default and you are forced to foreclose. : Hope that helps, : Damien Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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