Quote: (04-16-2014 11:05 AM)renotime Wrote:
Banks typically sell off their non performing assets instead of trying to get a borrower to pay. It's simply not in their business model to work out an exit strategy with the borrower.
Well, they were sort of forced to work with the buyer for some time. I think that has changed now.
The banks that sell off the notes will also service them. Just because they sell them off doesn't mean they are out of the picture.
If the note goes bad, the bank may get it back. I don't believe they will be selling off a bad house loan which is why they will go through foreclosure and try to sell the house in order to make up what they loss. That is if anyone doesn't outbid them at auction.
You are right, they typically don't care for the home owner and I never said they were working out an exit strategy. I said that they will pay 2k to the home owner to get the keys now instead of waiting 6 months. I would do the same every time.
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If you work with the borrower before they buy the house and try to determine what they are able to pay it is less likely you will have to foreclose on them.
It depends on what you mean by working with the borrower. Accepting smaller payments will be seen as you restructuring the loan to many judges which is why most banks won't accept partial payments.
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On top of this, if a borrower has put a lot of money into a home they are much less likely to default on it.
Great in theory but even if you sell with sweat equity, in mind, that doesn't mean they will follow through with it. You don't know how much they will put in after you sign over the deed regardless what they say will happen.
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I currently own two seller financed properties. They are mobile homes. Neither of them have any equity in them at all. The borrowers were unable to get loans from a bank.
I love seller financing. I have always targeted properties I could get some equity. Back in the day, it was mainly foreclosures and I would go after properties with multiple loans and negotiate them down. I have worked with quite a few banks during that time.
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And yet I receive a check once a month without fail.
That may change once you start hitting the neighborhoods with houses that cost a couple of grand.
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I highly doubt I will ever have to foreclose because both borrowers have put a lot of money into their respective properties.
I don't know if mobile homes are the same thing when it comes to foreclosures. Is it?
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You are right, though. There are risks.
But I think it's far less risky compared to rentals.
Depends if you want to wait 7 months to start getting payments compared to 30 days for an eviction.
People lose their houses all the time even if they have money in it. Job loss, medical issues... I had a family relative get a free and clear house. It was given to her. She put in hard wood floors, painted and made it look pretty good. She lost it to taxes of all things. Hell, in the end, she couldn't even pay her water bill.
I don't see it as less risky. In fact, I see it as more risk if you take back a mortgage and note just because they have control over the house for a long period and there isn't anything you can do about it. You are taking on more risk because you don't want the day to day grind of a rental. I would also do the same for the right property.