Can't Assign those REO's ... NEED HELP FAST!

Can you finance the property yourself, like, close the deal and then turn around and sell the property at the agree upon price to your buyer? I haven't work with coastal-funding.com but others on the forum have. Maybe you can contact Eric at Coastal-Funding and see how they can help. I apologize I can't be of much help; but that's the best advise I have off the top of my head. Someone else with more experience will come along.

I can't finance the deal myself. Even if i did, there will be "seasoning of title" requirements by the end buyer's lender of at least 90 days, so i can't do a same day close any more. Coastal only offers transaction (same day dough) money, and the only other option i would have would be to use a HML, which won't work either because there is a small profit spread here. I have a contract on the home for 167,085, it is priced 35% under FMV, FMV is at 255,000 or so. I would have to try to resale this home for about 225K or less to make it remotely attractive to retail buyers. The risk is just too high i think for a market where i would expect a 120 day hold +/-.

Any suggestions - I WILL LOSE THIS DEAL IF WE CAN'T FIGURE SOMETHING OUT QUICKLY.

Thank you all for your help.

Mati

If you for sure have an end buyer contact coastal funding (coastal-funding.com) and they can loan you the money to do a doable closing. You will have an A B C deal A= seller B= you C= buyer. They fund you the money to pay the seller and when the buyer pays you, you give coastal there money back. They are very cheap and easy to work with!

Hope this helps!!

sorry just read your second post!

sorry just read your second post!

I have never heard of that? I'm going to guess that your end buyer is getting financed through a bank? So the bank is saying that the seller must have held title for at least 90 days?

Are you sure you have a contract? Normally the banks addendums are part of a counter offer. Until this counter offer is signed, you do not have a contract. I would think that if the bank signed the contract without a counter offer, you would have a contract using the wording you put in. You would not be required to agree to the addendum which does not allow an assignment, and you would still have a contract. Ask your lawyer about this. I have never found an REO that allowed assignments. You may need to cancel the contract and get a finders fee from the end buyer.

Al

Tennball81,
The problem is a big one and it seems to only be getting worse investors doing a-b b-c same day transactions ...
The latest approval and release documents from Fannie stated a condition that prohibits a second transaction on the same property for 30 days. Freddie stated that they are moving to do similarly. Since the government now owns those entities, it is the current administration that is moving to try to stop double closings.
However, our government often does things without thinking through the ramifications. The bailouts actually encouraged less approvals for short sales and more foreclosures. Now they are have been trying to reverse this effect.
Since Fannie/Freddie own about 65% of the loans, what they do will effect the entire system.
The reason that they are trying to stop double closings is because they believe that you investors are making money at their expense. That certainly is true, but you are also mitigating their losses. Government entities just do not like individuals making money that they think should be theirs.
There is a legal issue involved with this prohibition though. Title companies may refuse to close with this condition, or they may just ignore the condition and close on the second sale anyway. If you use another title company, they would not know about the prohibition.
A problem, though, could arise if you do a double closing. If you violate the prohibition, AND if the lender has accepted the wire transfer so that the transaction is complete AS TO THE LENDER (secondary market investor), what is the effect of the lender REVOKING their approval. This is what we will be watching. They may not be able to revoke their approval legally. They may not have a valid lawsuit against the parties, notwithstanding the breach of that one element. They may not really have any damages. They could actually create a legal liability for themselves by prohibiting the second closing.
I hope this has been helpful. Any comments or feed back on how to circumvent this is always appreciated.

IN THE INTERIM, HOW DO I HANDLE THE DEAL DESCRIBED AT THE BEGINNING OF THIS THREAD? ANYONE PLEASE!!!!!!!
Mati

Al,
I am in attorney review right now with this property. It all began with me putting in an offer with a P&S contract through my agent. She presented this offer to the listing agent, along with my POF (cash terms) and my addendum (30 day inspection and assignable rights), within a few weeks they told us that our offer was accepted. They then sent to my attorney their "sellers addendum" for me to sign off on. It is in this addendum where they stipulate no assignments and a 7 day inspection period. I signed the addendum and sent is back to them with my addendum attached and a letter asking them to review my addendum (my attorney prepared this for me). They then called us back to let us know that they are not going to make any modifications to their addendum, how do we want to continue? That is basically the second time i have had an REO bank/seller do this to me. What do i need t4o do to be able to get around this and be able to assign the deal to a prospective end retail buyer who will need financing to buy?

SUGGESTIONS PLEASE AS I AM ABOUT TO LOSE THIS DEAL .... AGAIN.

Unless I'm missing something in your posts it looks like they signed off on your first offer. Did they also sign off on your addendum that allows you the inspection time of 30 days and your contingency to assign the deal? If they signed off on the initial offer and your addendum it would appear to me that you don't need to sign their addendum. Remind them, through your attorney, that they signed off on your offer and addendum with the assignment and inspection contingencies and that is the deal you are going forward with.

In the future, you may want to make these contingencies a part of your offer, not an addendum to the offer.

Mati,
Tell your agent to add the end buyer on your contract. Then on closing day you will do a quick claim deed to the end buyer and you get out of the deal. This is it!

Ok did you accepted their counter with their attach addendum or did you send them another counter with your contingencies attach; I'm confuse? If all else you can reject their counter offer and walk away and get your escrow deposit back.

Patrick,

The game that these banks are playing is that when they see that you submit an offer and you say that you are going to be a cash buyer, they quickly grab on to this offer and give you a verbal acceptance, even though they haven't even looked at my contract, where i clearly attach my addendum with the "inspection and assignable" clauses. They quickly send you their addendum, letting you know that you must sign this addendum, give them a POF and submit the earnest money in order to proceed. They will not entertain any questions or modification until this is done. They do not have anything signed at this point. I then sign their addendum and send it back with a letter from my attorney, indicating what we agree and don't agree with from their addendum, and reminding them that the original offer what submitted with my own addendum stating "inspection and assignable". Once they have this in hand, they tell me that they are not going to accept any modifications to their addendum and if i want to proceed, it has to be on their terms, or else, they are not signing the deal, and they will kill the deal. THIS IS A TOUCH ONE. So how do i assign an REO deal?

newinvestor,
The problem is that this end buyer would require financing, and i had to offer a CASH term when buying in order to have the low ball offer accepted by the bank. Regardless, then name of the BUYER, the name of the FINANCEE and the name of the TITLE OWNER all have to be the same, and as i am not the one getting financing, the end buyer will be, title will not close unless all three are consistent/the same.

Any other suggestions PLEEEEEEEEEEEASE!

Mati

Al,
There was no counter offer made by the reo bank. I submitted an offer with my addendum attached, they verbally accepted the offer and sent my attorney their addendum to be signed by me in order to proceed with the deal, my attorney reviewed their addendum and composed a letter stating what we agreed and didn't agree with (stating we needed them to acknowledge our original addendum submitted with the offer asking for a 30 day inspect. and assign) and at that point is where we get the door shut in our face ... so i'm not making it passed attorney review and i can't assign the deals to an end buyer, especially not if they are also going to be an end buy requiring financing, as my original contract also shows me as a CASH buyer.
SUGGESTIONS - HELP - ADVISE - PLEASE

as to what too tell you. Do you perhaps have a buyer (investor) that can pay in cash since your other buyer requires financing and just find them (buyer needs financing) another similar property? Only other thing you can do is to reject their offer and walk away. I'm not thinking outside the box (its late) right now but hopefully somebody else with more experience who was at one time in a situation similar to yours can best advise you. Have you tried advertising your deal on craigslist or kijiji (same as craigslist-free classifies)to attract cash investor? You need really need a buyer that can do a cash deal.

Most people on this site tell you not to try to assign an REO property. Banks just don't allow it. Sounds like you really don't have a signed contract yet. If you have a buyer, why don't you present the property to them for a finders fee?

Al

I may just have to give the offer up unless i can find a cash buyer as you say. I will have no choice but to modify how i work with REOs and i will have no choice but to ensure that my end buyer will be a cash investor or buyer. The only way i will be able to get around the assignment part is to create an LLC and bring my investor into it, me out of it and the contract will remain the same in the eyes of the bank.

It's a same i can't move this one property, it has over 70k equity and is in really nice shape for being and REO

So, where do ASSIGNMENTS work .... I'm i really going to be limited to having to find that really desparate home owner needing to get out of their home and willing to accept 50% of the FMV on their home? My investors want SFR and MULTI with equity and at least 35% under FMV ... any suggestions Al?

Thanks,

Mati

Did you ever join one?
Do you know someone in your area who is a member of one?

Maybe you could contact one, look online, ask them to send an email out to their membership asking for any investors / cash buyers who can close quickly, with your contact information. Outline the deal, make it brief, state that your buyer just couldn't close ...

A great deal will get someone's attention, this is a good place to start I think.
Angela

I gave your phone # to another DG member who might be able to help find you a buyer.
Will talk to you later.
Angela

Hi Mati,

In my opinion the best way to make the most profit from this with out loosing the deal is to go after a cash buyer. So then you can get 1 day funding to close the offer from the seller and then close the same day to your cash buyer. A double closing. Other wise this becomes a situation where you are recieving a finder's fee. Assignments deals are tough to do with a reo property. The best prospect for an assignment deal is a FSBO or anything not listed as a bank foreclosure. to you. Much success............Lubertha

Good Morning Mati,

I was wondering if you can call the Academy hotline and ask them for guidance?
I too was looking at some great REO's on zillow.com and now it makes me wonder to ask the academy about the banks request.

LilyfrmL.A.

Try this approach. I know title seasoning is an issue for financing, so find a small local bank or credit union that does not sell there loans. They can play by different rules. I have a friend doing back to back closings on a regular basis and he recomends a credit union for financing because they do not require title seasoning, and they keep there loans in house so they don't have to follow the Fanny and Freddie guidelines. Go to some local credit unions and talk to the loan officers to see if this is something they can do.

Hey when doing a double closing is it not true that you as the initial buyer never take title? It never gets recorded in your name..right? So I am bit confused with title seasoning. Does everyone (wells, gmac, chase..ect)require this 'title seasoning'? I've never heard of it before.

Thanks,
D

This old post had a response today, which might prove to be a good source of info for you too.

http://www.deangraziosi.com/node/4452#comment-34199

With a 'true' double close, you are taking ownership of the property for a brief moment and it will get recorded. It may take weeks for the county to record it but when the title company goes to close your sale to your buyer, their bank will know that you just purchased it.

It is important to know that 'title seasoning' while required by most large banks is a requirement of theirs and not Fannie or Freddie. At this point, Fannie and Freddie do not require seasoning. Banks implemented this rule to try and stop appraisal fraud and flipping. However, now that the banks hire their own appraisers, it seems more of an impediment to speeding economic recovery than anything else.

The best advice to get around title seasoning was mentioned above. It involves working with your retail buyer's loan officers to make sure they are using credit unions or local banks that have their own guidelines. Or, the easiest, find a cash buyer!