First pre-foreclosure assignment closed, with the payoff coming back 3,100 high

Finished this one 11 days ago and I want to write down what actually happened while I still remember the order of it.

House: 1,320 square foot three bed on a slab, 1991, inner ring suburb, tired but nothing structural. NOD recorded, auction calendared 47 days out when I first mailed. Balance about 187,000, arrears in the notice 11,200. I had the value at 245 with roughly 18 of work, based on four closed sales inside a mile plus one active that was overpriced and sat.

What I did. First letter never used the words foreclosure or default, it said I buy houses in that zip code, I can close on their timeline, and here's my cell. She called on the second letter. First conversation was 20 minutes and I asked nothing about the loan, just what she wanted to happen and when. Second conversation, three days later, she brought up the bank herself.

Contract at 198,000. Ordered title the same day I had signatures, and got her to sign the servicer authorization in the same sitting, which is the single thing I'd keep. Told her she'd net around 9,500 and, stupidly, said the number out loud before I had the payoff.

Then it went sideways. Title turned up a state tax lien for 4,300 (state level liens and how they're recorded vary by state, mine records them at the county). And the servicer's written payoff came in at 190,300, about 3,100 over what the arrears notice implied, from attorney fees and a force-placed insurance premium.

Her 9,500 was suddenly about 2,100. I'd already told her 9,500. I assigned the contract to a local flipper for 12,000 and gave back 3,000 of it at closing to get her to 5,100. Not what I promised. Better than making a stranger absorb my inexperience.

Net to me 9,000 on about 34 hours of work spread over six weeks. The auction never got postponed, we closed 12 days ahead of it. If title had taken another two weeks I'd have had nothing.

6 replies

2marcus_hale41CG4A

You got lucky on the size of the surprise. 3,100 you could paper over out of your own fee. What's the version where the payoff comes back 15,000 high because there's a second escrow advance and two years of unpaid taxes the servicer already paid? Her 9,500 goes negative, your 198 contract is above the payoff, and you have 30 days and a seller who now believes you lied to her. Did you have a plan for that, or did you just not hit it?

1dmitri_v6CapitalPRO6

Two document questions. Did your purchase agreement actually contain an assignment right, or did you take the position that it was silent and therefore permitted? And was the assignment fee disclosed to the seller on the settlement statement, because whether that disclosure is required, and how it has to appear, differs by state and some states are getting pointed about it. If your answer is that the title company just handled it, I'd read what they produced, because that's the document that comes back at you later.

1mikeoconnell7SP2APRO6

What was the actual first line of the letter? I've written nine versions and every one of them sounds either like a lender or like I'm hiding something. Also curious whether the local cell number mattered or whether that's folklore.

1ehernandez74PO2BPRO5

The thing I'd have lost sleep over is day 40. She's under contract at 198, someone from a big buying outfit knocks and says the house is worth 245, she's already emotional and now she thinks she's being taken. What actually keeps that from unwinding? A contract you'd have to enforce against a woman in foreclosure isn't much of a contract, practically speaking.

1paulgrant17PassivePRO5

Where did she go after closing, and did the 5,100 cover it?

First pre-foreclosure assignment closed, with the payoff coming back 3,100 high

6 replies