Milwaukie OR Short Sale Case Study #7

Location: Investment Property in Milwaukie, Suburb of Southeast Portland Oregon.

1st Original Balance Owed: $258,000 but  Ending payoff April  2009 $262,781 on Aurora Home Loans 1st Mortgage

It was listed in July of 2008 at $244,900. This deal came to us from an awesome Mortgage Planner Buddy Puckett from  Professional Mortgage in Salem, Oregon. He and I had multiple conversations about hiring us from the buyer’s side. We also had conversations about whether or not modifications were in the best interest of the home owner. Many of his refinances opportunities were over leveraged and needed some sound advice. “I said it really depends on

how underwater the mortgage lien amount is compared to what the current value and Monthly Cashflow.”

The servicers call it Net Present Value. We call it Broker’s Price Opinion (BPO).

Reviewing his financial statement this investment I explained to Buddy that in the loss mitigation world the bank uses net income versus gross income in their decisions. they also add in utilities Bills like Gas, Electric, Cable, internet, Water etc. and seek to find what is clients positive or negative income after everything is paid out every  month. In his client’s case the mortgage payments with property taxes and insurance were $2166 and his net was $4371. If he did not have this obligation he would be positive cashflow. It’s not just about the loan to value being negative.

However, My fear is the new Obama change in making homes affordable guidelines to review 125% LTV versus 105% LTV will trap thousands of homeowners in future negative equity positions in the future. Although monthly payment may be more affordable  I estimate it will take the average homeowner 10 years before they break even if they choose that path.

Client owed total $262,781 and lenders accepted $172,847 ( $89,934 LOSS) Oh MY!!! 66% of indebtedness….

but 91% of Net Present Value or their BPO of $190,000. The bank was loving US!! Closed 4-15-2009 Negotiating Time 4 Months.

The sellers gladly brought $781 the closing. I think in the future more and more sellers will see the value of bringing

$750 to $3000 to settle on the massive mortgage debt that encumbers the property. If they save a little each month by the time we get to closing it won’t be that painful.

( I will bring this topic up in another BLOG post)

5% Commission Approved agents were happy we created a “Deal” for them. This was simply just another short sale listing with little to no activity.

Here is listing history on RMLS from an old email…I love the fact my selling range was right ON…YEAH!!

On Mon, Dec 22, 2008 at 12:20 PM, JB Beyer < > wrote:

V…

“Jim K…XXXXXX (seller) contacted me to help him with the short sale. We don’t know the listing agent.

We are coming in from the buyers side with investor offer of approx. $165,000 to $185,000.

Probably 165,000 to start.

Can you find some BPO comps to $185,000 to $199,000? I think this is the strike price..

Can you do a RMLS history to find out how long she has had it listed..”

Property sold April 1th 2009 for $190,800.

If you are a mortgage originator like Buddy and want us to help you do a True annual review please contact us.