Course Q & A

Andy:

Below are my answers in bold.

1. In your professional opinion, what is the best method for purchasing property if �cash out� is not an option?
2. In a cash out someone buys the property.  Options are something else.  In an option you have a right to buy a property within a time period and / or certain conditions.
3. Release of lien- How does this affect me (the investor)?  If the security interests in the property are released by the 2^nd mortgage company..is this something I should pay off for the customer, or just let them handle themselves?
4. The release of lien does not affect you.  You are not liable to the debt the homeowner still has with the creditor.  What you need to do is make sure that the homeowner knows and understands well the situation.
5. Profit & Loss Statement- For self-employed borrowers, should this be generated by their CPA/Accountant, or can this be self generated?
6. Better by a bookkeeper or accountant. 
7. �Subject To� Financing With or Without Escrow- If Title is deeded to me before paying off any creditors, what is the possibility of a �due on sale� clause being enforced?
8. That is covered in the chapter.  Case by case.  Not a high chance if the loan is kept current but there are risks. 
9. �Subject to financing� � How do I get the 1^st mortgage reinstated?  How do they rescind?  Is this from paying off all arrearages?
10. Case by case. That is covered in the chapter.  You reinstate.  The homeowner is insolvent, otherwise they would do it.  The creditor can still rescind.  Banks are good at taking money and then using the other clauses if they feel like it.  Do your own risk / benefit analysis.
11. If �due on sale� is enforced for some reason, how do I refinance since the original borrower is still on the original loan?
12. Case by case.  You need to be ready for refi or sale.  Most likely there will be time.
13. What happens with the above situation if I stop making payments on this reinstated loan�..does this affect me, or the original borrower since I just took over their payments?
14. It affects everybody.  I would not get involved in something where there are chances of me not making it.  Has to be a good deal and you understand it.  A marginal deal will hurt you and will create legal problems with the homeowner.  That is in the chapter.
15. If I short a 2^nd mortgage payoff �subject to� when do I pay the 2^nd mortgage company if it is handled outside of escrow?  I wouldn�t want to cut them a check and have them back out..as we all know creditors like getting paid. 
16. You almost answered the question yourself.  Risk / benefit.  If you have a good deal, then it is worth it.  If not….  For example you do not want to spend to much fixing the property if you think you may end up in a hurry because the creditor is about to call the loan.
17. Is it better to handle �subject to� transactions with escrow to ensure title?  What do you suggest?
18. Few escrow companies are into subject to.  There is no better or worse. Case by case.  Now there are limitations in Oregon and Washington about kitchen table closings.  A good portion of this has to do with the quality of your client and how desirable the deal is.  I prefer things as clean as possible.

Andy, obviously you are good at studying.  Short Sales A-Z gave you all the needed knowledge for short sales.  The rest you need to learn on the field.  Hopefully this answers help.

For being active in Washington State you will need to look at House Bill 2791.  Oregon has a similar piece of legislation.  You will need to be very selective and knowledgeable about this type of transactions.  They are worth doing if done right and with the right expectations.  Consider joining www.northwestreia.com.  I am a member.  There you will find plenty of people serious about this business.  There are plenty of agents, investors and mortagage brokers doing this well.  There are even more wanting to do it and not doing it well because they do not want to adapt or learn. 

Oscar