Buy my own Loan from the Bank

[aaron]

Close to two years ago I bought a new house and moved across the country. I was unable to sell my previous house without dropping my price, so I decided to rent it out at a monthly loss until things "recovered" in the following year. (Look at my iTulip join date. I wish I found this site earlier!)

At this point, the house could sell quickly at the exact same price as the value of my loan. I stopped paying the mortgage a couple of months ago as I was hemorrhaging cash. I am sure foreclosure is imminent.

On NPR today I heard about a couple of guys who are buying up "toxic" loans directly from banks for 40 cents on the dollar. It got me thinking... I am sure my bank wants my loan off their books. Do you think they might take a check for 1/3 of the remaining loan balance? I can see why a bank does not want to do a cramdown because they still have the same shitty loan, with the same deadbeat "owners". But, they may be willing to take a cash buy-out, right?

What are your thoughts on this?

[metalman]

Re: Buy my own Loan from the Bank

yow! unless you can get your hands directly on those houseing bubble crash knife catchers on npr if i were you i'd pm seano... he's the man on this.

[Spartacus]

Re: Buy my own Loan from the Bank

If they get a whiff that it's YOUR house it's sure to be a non-starter.

Get a 3rd party to do it.

Also, if it's a non-recourse mortgage, delivering them the "deed in lieu of payment" is supposed to only affect your credit rating for 2 years.

http://www.google.ca/search?hl=en&q=...=Google+Search

http://www.google.ca/search?num=100&...G=Search&meta=

From one of those pages,
http://realestate.classifieds1000.co...reclosure.html

Deed-in-lieu-of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it is not as damaging to your credit rating as a foreclosure.

Dig around on Google - there are sure to be a lot more creative ways to deal with this.

Close to two years ago I bought a new house and moved across the country. I was unable to sell my previous house without dropping my price, so I decided to rent it out at a monthly loss until things "recovered" in the following year. (Look at my iTulip join date. I wish I found this site earlier!)

At this point, the house could sell quickly at the exact same price as the value of my loan. I stopped paying the mortgage a couple of months ago as I was hemorrhaging cash. I am sure foreclosure is imminent.

On NPR today I heard about a couple of guys who are buying up "toxic" loans directly from banks for 40 cents on the dollar. It got me thinking... I am sure my bank wants my loan off their books. Do you think they might take a check for 1/3 of the remaining loan balance? I can see why a bank does not want to do a cramdown because they still have the same shitty loan, with the same deadbeat "owners". But, they may be willing to take a cash buy-out, right?

What are your thoughts on this?

[Sharky]

Re: Buy my own Loan from the Bank

I say it's worth a shot, but only if you're willing to play hard ball.

Send your lender a registered letter, with a concrete offer to buy the mortgage back for 40 cents on the dollar (or whatever). Tell them (not a threat, but the reality) that if they don't accept, you will be forced to exercise your legal right to walk away from the house and the loan (assuming you have such a right in your state). Give them 30 days to respond.

The important part here, though, is to actually walk away if they don't agree. They might very well eventually agree, but they might wait until they've received your keys in the mail. If you're not willing to go that far, your negotiating position isn't nearly as good.

[swgprop]

Re: Buy my own Loan from the Bank

I am sure my bank wants my loan off their books.

You are assuming your "bank" has the loan on their books. That is not likely. Most loans are securitized and owned by investors. Your servicer has the fiduciary responsibility to minimize the loss to the investor (and to themselves if in fact they still held the beneficial interest in the mortgage). They will not take 30 or 40 cents on the dollar if they can foreclose and recover 50 cents on the dollar.

Deed-in-lieu-of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it is not as damaging to your credit rating as a foreclosure.

A DIL *might* be one notch below foreclosure in damaging your credit record but in any case will remain of record for 7 years. And many servicers will not accept a DIL because of possible title implications. Frankly a foreclosure is cleaner.

Your most viable option is to contact your servicer and advise them that you simply cannot make any more payments because of the cashflow bleed. From there, there are options. They may modify the terms and drop your interest rate to a point where you could stem the bleeding. You could list the property for an appropriate price and, with the servicer's approval, do a short sale. A short sale involves debt forgiveness which was formally a taxable event, however Bush signed a law negating that for the time being (depending on some details).

And of course you can certainly offer to write that check for 1/3 of the outstanding balance. Maybe you'll get lucky. But don't get your hopes up.

Good luck.

[c1ue]

Re: Buy my own Loan from the Bank

If your loan hasn't been sliced and diced (unlikely) it is worth a shot.

The bank is NEVER going to let you pay back only part if you are exiting the transaction with any cash whatsoever.

They'd rather sit on your (credit) head for 7 years. Also are you in a recourse or non-recourse state? Makes a big difference.

[aps1087]

Re: Buy my own Loan from the Bank

2 questions:

What is your loan balance?

What is the market value of your home?

[aaron]

Re: Buy my own Loan from the Bank

We bought the house for 800 thousand, with 20% down and a 15 year 5 1/4 mortgage.

Loan balance: 530
Home Value: Should sell quickly at 590.
However, after taxes etc, I'd still lose in a sale.

I am not interested in it.

[c1ue]

Re: Buy my own Loan from the Bank

Aaron,

If the home in question is not even negative equity, I'm quite certain that the bank would not sell the loan for anything less than face value - even assuming it could put Humpty Dumpty back together again.

While you've lost a lot of equity in the home - and you clearly don't want to keep it anymore, the best course of action is to get a realtor and make a special clause compensation contract: so long as you get 'X' dollars back, say $530K, the realtor gets anything over.

You may be able to find one willing to take that chance.

In this case, you'll get a fully motivated agent and will have capped your downside. But of course, also capped your upside.

[aps1087]

Re: Buy my own Loan from the Bank

Aaron,

If the home in question is not even negative equity, I'm quite certain that the bank would not sell the loan for anything less than face value - even assuming it could put Humpty Dumpty back together again.

Agreed. If the bank can foreclose and get 590k, they are not going to sell it for 50 cents on the dollar. They still have plenty of equity collateral.

[cjppjc]

Re: Buy my own Loan from the Bank

Aaron,

If the home in question is not even negative equity, I'm quite certain that the bank would not sell the loan for anything less than face value - even assuming it could put Humpty Dumpty back together again.

While you've lost a lot of equity in the home - and you clearly don't want to keep it anymore, the best course of action is to get a realtor and make a special clause compensation contract: so long as you get 'X' dollars back, say $530K, the realtor gets anything over.

You may be able to find one willing to take that chance.

In this case, you'll get a fully motivated agent and will have capped your downside. But of course, also capped your upside.

That's called a net listing. Most states don't allow it. Put the house on the market and try to get back whatever money you can. It's as simple as that.