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update on house situation #2

January 14th, 2014 at 01:40 pm

update on house situation #2. I have 2 weeks left to get the money

Essentially most everyone has been called (but searching for new lender contacts today). I have 4 people on the 'hook', I WILL hear preliminary news tomorrow on at least 2. I had planned to refinance out in a year (via purchasing it from my LLC) which made the higher rates not so bad. I just found out that I may not be able to. My plan was to take title in my LLC and then buy it from myself in a year (after last foreclosure sale/deed in lieu date.. my 2 flat.. I just withdrew my attorney from that case). There is some concern that is not an arms length transaction. The lender raised that concern and I botched the answer.. possibly losing his confidence. I am unclear if he is going to back out or not. My accountant says there is way around that. I need to get clear on what that is and STOP talking when I do not know the terms.


1. call attorney and FHA underwriter on arms length issue
2. call my foreclosure attorney ( that I just let go )and ask him what other outcomes there are to a foreclosure case outside of deed in lieu and sale
3. call attorney for bank (or rehire above attorney to do so)on 2 flat in foreclosure and offer to give back deed in exchange for some other marked resolution than deed in lieu.. like have htem dismiss the case etc.. This is because the waiting period for foreclosure starts after the deed in lieu or sale date but there is NO WAITING PERIOD if neither of those occurred and the case just faded away.. Maybe if these guys get the house they can just make the case go away

I need to get clear on things and keep pushing

Yesterday was a terrible crying out of control night when I got that arms length transaction news. My deal hinges on getting out of the hard money loan in less than 18 months.

I do not want to pay hard money for 3 years aqnd it does not make sense and no one wants to lend for that long.

If I can not buy it from myself (LLC). I have to wait to refinance. there is THREE year waiting period w FHA to refinance


10 Responses to “update on house situation #2”

  1. the deacon Says:

    Could you clarify one point: it is not considered an arms length transaction because in the future you will be both the buyer and the seller?

  2. Another Reader Says:

    I'm surprised your current lender would allow you to "buy" the house back at a price less than what's owed on the mortgage. If you are doing a "short sale," are you representing the sale to the buyer, your LLC, as an arm's length transaction? You may have a problem with your current lender if that's the case.

  3. the deacon Says:

    If I read correctly, the buyer for the short sale is the original owner who defaulted. (It reads like a loan modification/HARP situation). The bank is reselling the house for a lower re-negotiated price, but because it isn't conventional there appears to be a loan-funding issue. I follow with interest because I've never heard of such a thing.

  4. Another Reader Says:

    A loan modification would leave the current mortgagor on the existing loan, and the terms would be modified. This sounds like the owner is buying the house via short sale and putting the title in her LLC. That's generally prohibited by the loan investor and the servicer. An arm's length sale to another party is usually a requirement of a short sale. I will review through the blog history to get a better understanding of the plan.

  5. Another Reader Says:

    Looks like the lender has agreed to a short pay-off. It does not look like the pay-off requires a change in title (not a sale), so I'm not following the reason for putting the property in the LLC. It will be interesting to see how this plays out.

  6. Rachael777 Says:

    This is a legal 'short settlement' but it is similar to a short sale EXCEPT the owner keeps the house. the BANK suggested this option to me. The bank has me on title and the new lender knows i am on title. The purpose of taking it into an LLC or anothr entity (now) is so that in a year I can 'purchase it' vs 'refinance'. There is a 3 year waiting period to refinance w an FHA loan (have to hold hard money longer) and a 1 year waiting period to 'purchase'. I have calls into 2 attorneys to determine how to take title so I can purchase it in a year. This is something companies.. rich familys (I suppose) do all the time as a way to transfer assets. I am not from either though and need to figure out how it it done quickly. Not being able to refinance into a normal loan for 3 years will kill the deal unless I can get a loan for that amount of time and for an interest rate (and points) I can carry... Does that clarify? if not I can rewrite. I am learning too. Smile..*I still need to find the money though..,. and working full time and more just on that** By the way there IS an actual FHA loan (for short refinances) and I applied for that and met all criteria except the 1 year waiting period after foreclosure.. so deal fell through. I then revived the deal with offering the same settlement myself., CRAZY!!

  7. the deacon Says:

    I think I follow it now.
    Good luck getting your funding in place; that has to be stressful.
    Looking forward to your sharing some good news about financing!

  8. Rachael777 Says:

    The reason the foreclosure is at issue. I have a 2 flat owned by me and my ex that has not sold yet but is in foreclosure. An open foreclosure (even though I am not liable for the loan via BK is an issue with many lenders) I am trying to resolve that quickly (without having it recorded as a sale/deed in lieu) so the waiting period is either not there or can start (already!). waiting period is ONLY in effect after deed in lieu or sale date. It does NOt apply if case is simply dismissed, withdrawn whatever

  9. Another Reader Says:

    This has been a trying time for everyone that has found themselves underwater on multiple properties. I have seen a lot of people with multiple short sales and/or foreclosures. One person I know got divorced, lost his job, and lost all his properties in short sales. He bought a small house for cash and three years out is in the position of buying a nicer home with a mortgage and converting the free and clear house into a rental. This downturn has been a learning experience for everyone.

    Any chance you and the ex can short sale the two family? It would take too long to help with financing the short pay-off, but might help with the refi.

  10. Rachael777 Says:

    Thanks for your thoughts. Short sale though will take too long. We need this house gone now so my waiting period can start. My primary residence is the priority. even though I will lose icnome w givng 2 flat back. And there is no money in the 2 flat.. underwater .I DID like your friends story. similar to mine except we hung on to the homes and let them go to sale.. but WAIT just had an idea.. I will check if a short sale has the same waiting period. Making calls at noon (doing loan stuff now) maybe that is an OPTION to get out from under the foreclosure/deed in lieu. WISH I had thought of that sooner as lender just got a judgement and is proceeding to sale.. Making calls at noon to clarify/


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