Ely Culbertson_IHB
New member
Love your blog here - I just discovered it today.
Here's my situation:
We sold in 3Q '06 just past the peak of the market after owning for 14 years. I'm in the development business, so we decided to rent for a few years and wait for things to stabilize before we pounced. Well, like many, my projects have fallen flat and we've been living off savings. I know, boo-hoo. Who knew things would fall for this long?
Here's the story on the place we are renting: The value has dropped from $1.2 MM to about $850 - 900. The guy that owns the place has a 1st TD around $950, a 2nd of $140 and a small 3rd (yes he has sucked money out of it along the way). He's been trying to sell it for quite some time, and has been following the market down. All along he would have been in a short sale position, but the 1st lender quashed several prior deals since the comps didn't support the price. The realtor is a nice lady, but she really only wants to make a deal.
He's about $2,500 - 3,000 short every month on the debt service. This doesn't include taxes or HOA, which I have no idea if they are current or not.
Question 1. If you were in his shoes what would you do / advise?
A. Keep trying to sell the home to preserve his credit, which by the way is already screwed up due to a snafu when the 2nd sold the loan.
B. Negotiate with the lender for a deed-in-lieu subject to a settlement with the 2nd and 3rd to avoid foreclosure (is this possible)?
C. Try to restructure his first TD in some fashion so that his payments are smaller. (Is this even doable keeping the 2nd and 3rd intact?)
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From my viewpoint:
I would like to buy the house at a deep discount. If I can't buy the place, I would at least like to save some dineros on my rent / occupancy cost. Heck, I'd even sell / maintain it for the bank.
I offered him a deal where I would prepay some amount of rent in exchange for a one year lease IF he would agree to "B" above. That way, I would have this place for one year at a substantially reduced rate and he'd get some cash in his pocket. If he ended up getting foreclosed on (which would wipe out the lease) I'd at least get the 141 days for the foreclosure + 90 days or so prior to eviction, although I would leave before the UD is entered obviously. He refused, thinking it was 'unethical'.
I really 'don't' want to force this guy into foreclosure, but my evil little brain thinks that he has nothing to salvage here and he won't go through the time, expense and headache of evicting me. After all, the guy has about $400,000 of negative equity! The home isn't even in default yet, so its not on the lenders radar screen. I also feel as though once I leave, all leverage (real or imagined) vanishes.
Question 2. What would you do if you were me?
A. Be an a-hole and stop paying the rent and allowing them to show the house. This will force his hand in some fashion (hopefully not around my skinny little neck!) into C above.
B. Something bizarre like trying to buy the 2nd or 3rd at a deep discount to get a place on title.
C. Move and forget about the whole thing.
D. Another idea / opportunity that I'm not thinking of.
Thanks.
Here's my situation:
We sold in 3Q '06 just past the peak of the market after owning for 14 years. I'm in the development business, so we decided to rent for a few years and wait for things to stabilize before we pounced. Well, like many, my projects have fallen flat and we've been living off savings. I know, boo-hoo. Who knew things would fall for this long?
Here's the story on the place we are renting: The value has dropped from $1.2 MM to about $850 - 900. The guy that owns the place has a 1st TD around $950, a 2nd of $140 and a small 3rd (yes he has sucked money out of it along the way). He's been trying to sell it for quite some time, and has been following the market down. All along he would have been in a short sale position, but the 1st lender quashed several prior deals since the comps didn't support the price. The realtor is a nice lady, but she really only wants to make a deal.
He's about $2,500 - 3,000 short every month on the debt service. This doesn't include taxes or HOA, which I have no idea if they are current or not.
Question 1. If you were in his shoes what would you do / advise?
A. Keep trying to sell the home to preserve his credit, which by the way is already screwed up due to a snafu when the 2nd sold the loan.
B. Negotiate with the lender for a deed-in-lieu subject to a settlement with the 2nd and 3rd to avoid foreclosure (is this possible)?
C. Try to restructure his first TD in some fashion so that his payments are smaller. (Is this even doable keeping the 2nd and 3rd intact?)
_______________________________________
From my viewpoint:
I would like to buy the house at a deep discount. If I can't buy the place, I would at least like to save some dineros on my rent / occupancy cost. Heck, I'd even sell / maintain it for the bank.
I offered him a deal where I would prepay some amount of rent in exchange for a one year lease IF he would agree to "B" above. That way, I would have this place for one year at a substantially reduced rate and he'd get some cash in his pocket. If he ended up getting foreclosed on (which would wipe out the lease) I'd at least get the 141 days for the foreclosure + 90 days or so prior to eviction, although I would leave before the UD is entered obviously. He refused, thinking it was 'unethical'.
I really 'don't' want to force this guy into foreclosure, but my evil little brain thinks that he has nothing to salvage here and he won't go through the time, expense and headache of evicting me. After all, the guy has about $400,000 of negative equity! The home isn't even in default yet, so its not on the lenders radar screen. I also feel as though once I leave, all leverage (real or imagined) vanishes.
Question 2. What would you do if you were me?
A. Be an a-hole and stop paying the rent and allowing them to show the house. This will force his hand in some fashion (hopefully not around my skinny little neck!) into C above.
B. Something bizarre like trying to buy the 2nd or 3rd at a deep discount to get a place on title.
C. Move and forget about the whole thing.
D. Another idea / opportunity that I'm not thinking of.
Thanks.
We have some sources of income - the above is something of an exaggeration but there is a little blood. 