Owner Finance Sale?

Posted by Keith(CA) on December 01, 2004 at 21:00:04:

In Reply to: Foreclosure in GA posted by jay on November 30, 2004 at 13:48:54:

Jay,

Have you considered an owner finance sale?

This is much simplified, but here it is in a nutshell. Maybe you can drop the price a little bit to encourage a sale, but owner finance at a higher interest rate. The down payment from your buyer need to be enough to cure the default, and the monthly principal + interest payment should be slightly more than what you pay each month. You receive a check from your buyer (since you're the bank), and then you send a check in to cover your payment. Your buyer gets all of the perks of ownership on their taxes (not you). You can come out slightly ahead financially (or you might even be willing to take a slight loss each month), but at least the big headache goes away. Remember to factor insurance and potentially changing property taxes into the equation. To do this you use a wrap-around mortgage, or whatever you use in GA (here in CA we use an all-inclusive trust deed) to secure your interest in the property...you can foreclose to get your payoff if your buyer stops paying.

Good luck.

: I own a house in Georgia, and I recently moved to another state. The house has been on the market for over a year, even though it is a fast-growing county, and we are now four payments behind. I went through Loss Mitigation to try a short sale, but I have a home equity loan and that bank won't work with us at all. Because of that, Loss Mitigation can't do a Short Sale or, I'm assuming, a Deed In Lieu of Foreclosure. It's too late to rent it out (we'd have to catch up too many payments), so are there any other options? If they foreclose, what are the ramifications (it's an FHA loan)? I'm ready to walk away from it at this point.

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Comments:
: Jay,

: Have you considered an owner finance sale?

: This is much simplified, but here it is in a nutshell.  Maybe you can drop the price a little bit to encourage a sale, but owner finance at a higher interest rate.  The down payment from your buyer need to be enough to cure the default, and the monthly principal + interest payment should be slightly more than what you pay each month.  You receive a check from your buyer (since you're the bank), and then you send a check in to cover your payment.  Your buyer gets all of the perks of ownership on their taxes (not you).  You can come out slightly ahead financially (or you might even be willing to take a slight loss each month), but at least the big headache goes away.  Remember to factor insurance and potentially changing property taxes into the equation.  To do this you use a wrap-around mortgage, or whatever you use in GA (here in CA we use an all-inclusive trust deed) to secure your interest in the property...you can foreclose to get your payoff if your buyer stops paying.

: Good luck.

: : I own a house in Georgia, and I recently moved to another state.  The house has been on the market for over a year, even though it is a fast-growing county, and we are now four payments behind.  I went through Loss Mitigation to try a short sale, but I have a home equity loan and that bank won't work with us at all.  Because of that, Loss Mitigation can't do a Short Sale or, I'm assuming, a Deed In Lieu of Foreclosure.  It's too late to rent it out (we'd have to catch up too many payments), so are there any other options?  If they foreclose, what are the ramifications (it's an FHA loan)?  I'm ready to walk away from it at this point. 


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