If you have $170K click here

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2010 Dec 12, 7:35am   7,364 views  22 comments

by Bap33   ➕follow (0)   💰tip ()   ignore  

I made an offer on an REO, it was accepted. Trouble is, the FHA lender used up all of the escrow time farting around and we are out of time. My financials are perfect, my credit is perfect, I have zero debt. The reason I am asking for this help is not related to any issue on my part. It is all about time, and I have little faith that the current loan will fund in time. So, here I am.

This loan I'm asking you to make would be secured by the house I am buying as my family home. I am in escrow, but the FHA/HUD lender has wasted all of my escrow time and escrow is due to close on Dec. 21. I would like to put some money into your hand vs Bank X.

I will pay $12K at close of escrow for use of your $170K for 1 year.

$170 secured against home

REO Home purchased for $134,500 in 95301
Contractor bids have inprovements at $30,000 (roof, HVAC, floor covering, paint, all permits and insurance) (improvements will not take more than 60 days to complete)
Rough repairs total $164,500
Requested total $170,000 to allow for some appliances ($2,000) and "just in case" stuff ($3,500). I will only use what is spent on repairs and improvements.

I'm open to input, but here's some thoughts.
I put "1 year" based on what the lender broker suggested be a good time frame. So, 1 year the max time I'll have your money.
I'll pay to have the lending broker handle any paper trail to make re-fi an easier deal at the end of term.
I'll pay all closing and any other escrow related charges
All funds paid to escrow ($134,500) and recipts from contactors or venders, no cash put in my hand at any time. Bids total $30K, but I want to have a cushion to assure completion. That's where $170K comes from.
The home is worth $170K as is.
The home will appraise for well over $200K when repaired.
I'll pay for all refi appraisals and lending/escrow costs at that time.
The idea is for me to pay you for the use of your money up front, and then return every dime to you at 1 year (or less). I will not reduce the amount paid if I can refi at an earlier time. You get $12K up front, and $170K at end, no matter if I can do it in 7 months or 12 months. I will pay the full amount.

I checked with a local hard money person and they are cheaper, but the time frame is an issue. I need this to be all set before December 21st (9 days)

So, there you have it.
If you are not the lender I need, but you find one and they help me pull this off, you will get $1,000 finders fee the same day that I hand the lender their $12,000, when this escrow closes and repairs can begin.

I am not flipping this house. It will be my family's home for the rest of my life, in my opinion.

Thanks for taking the time to read this,
No, it is not a scam,

Patrick, if this is not allowed, then I appoligise and you can remove it without notice. Thanks.

Comments 1 - 22 of 22   

1   Bap33   2010 Dec 12, 9:11am  

The time frame being tossed out by the lender is like "30 days" due to holidays and such
The agreement on the escrow for the REO is up on the 21st and in the agreement it only allows a "10 day" extention. My REpro had me fill it out already and she is ready to send it in.

The seller is an REO clearing house based in India. Think that will cause issue?

I hope you are right, but this sucks sucks sucks. It is worse than being outbid by stupid people with free money. I'm now being beat by a disorganized system with zero daylight, where each step is not illuminated ahead of you, but rather you must stumble along to get the pat lit. sucks sucks sucks

This week is when I have $1,000 worth of inspections and appraisals to order ... stuff that never comes back to me ... yep, it's suck fest 2010 in Bapville.

You don't wanna make an easy $12K Doc?

2   Bap33   2010 Dec 13, 10:44am  

seems like there is a place in between the two where a person could make some good money off of people like me out here .... there are lots of us.

As far as the LTV .... this place wouls easily sell in two days for $170K as is, and for $220K after repaired .... so, I'm asking for a 90/10 loan and paying $12K in cash up front. That's instead of making a big DP for no real reason. ... plus, I just can't afford that.

The points part has not been mentioned by anyone.... who gets that money?

3   MoneySheep   2010 Dec 13, 11:07am  

This is a nothing down deal with a no interest loan of $182k, and 6.59% points. This would not fly even before the housing crash. After the crash, to get loans, lenders must see your cold hard cash at risk, particularly house price will see another 15% dip.

4   Bap33   2010 Dec 13, 1:30pm  

ok ,, I think I see

One broker is working to get me an intrest only (12% no time frame) with $17K down. That works out to about $1,500 a month in interest (his numbers), and I can't refy for 6 months, so about $9,000 in interest. This may be my only option. He is charging me 1% to write it up.

Arrrggggg ........ this stuff sucks.

I'll pay $1,000 finders fee to someone finding a person with $170K that's happy taking $12K to be without it for 6 months or so.

5   SFace   2010 Dec 14, 12:26am  


170K with 17K down is 153K net so not enough to fund the purchase and construction. Then there is the 1,700 in point for this deal. Points is just a nicer way of saying fee to the lender. Worst, you're not gonna get a 1099 to claim any tax benefit for 18K+ in annual interest and point. 170K at 12% is more than 1500 a month, simple math tells me it is 1700.

After that, you will have to scramble for a refinance non-purchase loan to replace the loan shark. Which is not guaranteed. There is less help on the financing since it is no longer a purchase loan so you may be looking at 30% LTV ratio and whatever insane requirement the bank may require which at 200K appraised value will give you 140K loan not withstanding all the re-fi cost, not enough to repay the loan shark which is still the full 170K. If it appraise for less, say 180K, you are in serious trouble since you'll drain all your cash from this transaction (financing fee, loan shark fee/interest, construction and re-fi, and furnishing new home) and have little flexability left. If financing cost/requirement rise, you are in trouble. Contractors are notorious for understating their bids and get you in various ways and you'll pay much more than you think. That's ten years worth of stress in one year This is absolutely the wrong way to go about it.

The deal is riskier to the lender than you think. Too many if's and contingencies, but mostly why would anyone pay you 170K to buy a 136K REO and get 12K compensation for 170K is not even close to enough. It's not a first priority secured loan as the government and contractorsm accountants and lawyers will have their hands in the pot first, so there is no cushon. You're not gonna find a much better deal than what the broker arranged which is a combination of high rates, upfront interest which nets out the loan, lock in and points. It will be a combination of those components.

Ask for the extension and push back the inspection stuff, for the reasons above, don't sign into the above arrangement. I'm glad you asked for help, but Good luck!

6   Bap33   2010 Dec 14, 10:14am  

on point #1) trying for more time and offering to pay per diem charges.

on point #2) The loan for $170 would not be a lump sum dropped in my hand. The house price is 134,500, and that would garner the assett, that is worth $170 as it sits unrepaired. The remaining $30K in repairs would then bring the total loan to $170 as the repairs are paid for. After repaires the house should/could/might be worth $220K-ish. So, the $12K in advance is better than most intrest only deals if I gotout in short time. OTOH, the problems with refi on the backside are a very real danger.

I am going through every FHA/HUD inspection hoop right now. Ordered the FHA before and after appraisal today. If the extention of escrow is granted then I will order the septic check, the well check, and the fireplace check.

No extention, and I'm going with Loan Shark Inc. if I can make it work. I know, I know, but this really is a diamond in the rough.

7   Bap33   2010 Dec 14, 10:15am  

thanks for the good luck E-man

8   Â¥   2010 Dec 14, 11:31am  

Bap33, you really seem too attached to this deal. Be careful about this, there are other fish in the sea.

9   Bap33   2010 Dec 14, 12:27pm  

I respect that opinion. I am trying to keep the ""it's just a house" thing going. Trouble is, this is the farthest I've gotten one of my low-ball deals!!! lol Kinda wanna land this fish, you know?

10   vain   2010 Dec 14, 1:31pm  

Your offer price buys a lot of house in that zip code. I'd like to see pictures.

And if you say it's worth $170k as is, it must be good. Please show pictures :)

11   Bap33   2010 Dec 14, 1:46pm  

in the 1acre lot area this house is a mid-grade one. There are $400K, 3,200sqft monsters right up the street, and there are single wides on 5 acres of weeds next door to them. Great location, great school, so-so house compaired to area. But, the house is the easiest part to make changes to. The location just does not move much! lol


12   Bap33   2010 Dec 15, 3:26am  

I confirmed with the lending broker just now that an FHA refy for market value after repairs is no problem after 6 months.

The push is to close the deal and extend escrow, as you folks suggested, but I am going to line up hard money, just in case.

13   pkennedy   2010 Dec 15, 3:35am  

I'm with E-man and SFace on this one. Avoiding hardmoney is the best bet. By the time you're done here, the hardmoney will erase much of your "hard bargaining"

Another option you might want to look at, if you're going hard money would be some credit cards with (generally 3%) interest rates right now and using the convenience checks to pull a good deal out, thereby avoiding hardmoney borrowing at much higher rates. Banks might not like all that money outstanding, but it's probably better than dealing with essentially loan sharks.

14   Bap33   2010 Dec 15, 9:50am  

ok, I have a taker on my offer of $12K up front to use $170K for (6 months min, 1 year max). All done through a broker to create a paper trail.
It does suck that I just spend $1675 on inspections and appraisals. Sucks.

Meanwhile we are still walking down the 203K path, but this other way of going is way way cheaper if you ask me.

Ok folks, give me some more info so I know what to double check about.

I will be spending the same $1,400 to have the broker do either loan, so no diff
Closing costs are like $4K, either way.
DP is about 8K with the FHA thing.

The $170 loan will have zero payments while I complete repairs and prepair to refy. I am really having trouble seeing the down side.

Please folks, keep the good info coming! I will be handing the cash lender all of my financial stuff tomorrow

15   Bap33   2010 Dec 16, 12:49pm  

Eman -- you were 100% correct. Thank you.

The refy would have to be after 12 months. It was called one type of refy from 0 to 6 months, another from 6 to 12, and another after 12. The only way to use the repaired value and not the sale price as the appraised value is to go beyond 12 months. All doube checked agian, and this time he read the right stuff. Great job looking out guys. He was mistaken.

We got an extention on the escrow .. ye ha .. and so the lender is working that out too. He prefers doing the 203K loan over the hard money --- mainly because "that is the right way to do this .. safest". But, the hard-money will remain an option because under my terms it is more economical .. as long as the market or lending does not tank! lol

16   vain   2010 Dec 17, 11:02am  

E-man says

Now go get that house. You don’t have to say it, but we all know you felt in love with that house :P

He probably drives by it once every couple of days to gawk at it... I know how he feels.. haha.

17   Bap33   2010 Dec 17, 11:23am  

yes ... yes I do.

I draw plot plans for fencing ideas and shop placement

I write notes about stuff that needs fixing that is not part of the repairs

I'm sleeping very little from the stress

Actually, this kinda sucks right now, but soon I'll be broke and not sleeping for a whole new set of reasons!! Yea!

18   artistsoul   2010 Dec 17, 11:29am  

Good luck Bap. I've been following this from afar. We all know what it's like to dream. I can see that you refused to let your dreams die. Way cool! And, as for E-Man...hope he & his level headed advice stick around this blog :)

19   Done!   2010 Dec 18, 3:48am  

Troy says

Bap33, you really seem too attached to this deal. Be careful about this, there are other fish in the sea.


20   Done!   2010 Dec 18, 3:53am  

Bap33 says

I respect that opinion. I am trying to keep the “”it’s just a house” thing going. Trouble is, this is the farthest I’ve gotten one of my low-ball deals!!! lol Kinda wanna land this fish, you know?

You know I can respect that, once I finally found this place to pull the trigger on. I felt if the deal fell through the cracks. I wasn't going to even think about buying another house, until a Seller/Agent came banging on my door, begging me to take their house.

Well actually I did bid on a few other houses for a lot more money earlier in the year. I'm kinda glad those never stuck. Ironically they are still on the market, one of them is even on the block around the corner from me. I drive by it all the time. Neighbors confer when I say, "whew! I'm glad I didn't buy that one.".

21   Bap33   2010 Dec 19, 7:24am  

LOL .. I hear ya .... I sat down and went over my "missed" list .... and I feel like the luckiest person on the planet. I am not THAT smart, I am just THAT lucky.

22   American in Japan   2010 Dec 20, 12:25pm  


I agree about waiting to give the congratulations.


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