Richman & Associates
What Services Does Richman & Associates Have to Offer
Home Retention KEEP YOUR HOUSE!
Loan Modification
Interest Rate / Payment Rate Reduction
Principal Reduction
If Moving? Or Want Out with no Repercussions? Unemployed or No income?
Deed in Lieu of Foreclosure
Short Sales
Private Money Loans
Credit Report Repair
With the increase of interest rates on home loans many homeowners with adjustable rate loans are faced with mortgage payments they can no longer afford.
Our job is to convince the current lender that it is better to lower the homeowner's payment by lowering the interest rate or payment rate by creating a payment plan the borrower can afford, than to take the home with a foreclosure sale and lose money on the re-sale. Keep in mind lenders lose money on bank owned properties as it will sell for less than market value, and they must pay a commission to a Realtor; and closing cost plus the cost of holding the property while they wait for a sale in a market that is depreciating.
We need to prove to the lender what the maximum payment is that borrower can afford by constructing a financial plan for the homeowner that the lender will approve.
Also as the homeowner is often late with their payments and in foreclosure or soon to be in foreclosure, we need to ask the lender to forgive the delinquent payments or put them on the back of the loan.
A rate reduction in most cases is the only possibility for a homeowner to retain their home --our fee is a risk that each homeowner must weigh.
When a property is upside down and the homeowner is facing foreclosure, the homeowner has more leverage than they may realize against their lender. It is our job to force that leverage upon that lender. In doing so, we are successful in wiping out large portions of principle. Typically 50-80% on seconds.
In today's market, we can also convince the lender of first lien holders to lower the principle amount to the present market value. (ex: a homeowner owes $600,000 on first but the appraised value is $500,000. We can convince the lender to lower the loan amount to $500,000.) That is a $100,000 reduction in principle for the client.
the borrower can afford, than to take the home with a foreclosure sale and lose money on the re-sale. Keep in mind lenders lose money on bank owned properties as it will sell for less than market value, and they must pay a commission to a Realtor; and closing cost plus the cost of holding the property while they wait for a sale in a market that is depreciating.
We need to prove to the lender what the maximum payment is that borrower can afford by constructing a financial plan for the homeowner that the lender will approve.
Also as the homeowner is often late with their payments and in foreclosure or soon to be in foreclosure, we need to ask the lender to forgive the delinquent payments or put them on the back of the loan.
A rate reduction in most cases is the only possibility for a homeowner to retain their home --our fee is a risk that each homeowner must weigh. Note: the success rate on a workout program without a rate reduction is 97%.
Note: If we can prove you owe more that the value of the property and there is a second loan, we can convince that second lender to take a major reduction --of 50% to 80% -- off the balance of the loan.
Deed in Lieu of Foreclosure
Under many conditions lenders will accept the property back from the borrower as full payment in order to save the time and expense of going through the foreclosure process.
Our job is to convince the lender it's in their best interest to accept the property as payment in full.
This is not a simple plan as we must provide the lender with a complex detailed analysis of current value of the property --and future value. Then we must prove that the borrower cannot afford to make payment or sell the home any time soon or at all.
Note: A deed in lieu will also prevent the lender from filing a 1099 on their loss which is regular income to the borrower.
Many of these loans are 90% or 100% loans made in areas where the value is stagnate or depreciating. Missed payments and legal fees will put many of these properties at 110% to 120% LTV. Some homeowners will want to keep their home and look to you for a lender workout to keep their home. Many will want to move on but can't sell. Note, in many States the lender can sue for any loss.
FOR THEM A SHORT SALE IS THE ANSWER.
We handle Short Sale negotiations with lenders for many of our mortgage brokers, but we never really made this known to our network of brokers. Now we realize there is a large demand for this service and doesn't seem to be very many companies that know what a Short Sale is, and much less on how to work with mortgage brokers, investors and lenders to negotiate a Short Sale. Here is what we do know.
There is a right way to put together a Short Sale offer so a lender can justify settling for your offer. But most offers are badly done and leave a lot of cash on the lender's table.
While most Short Sales are on residential properties they can be, and are, completed on commercial properties that are also in troubled areas.
Why would a lender allow the property to be sold and accept a loan payoff that is far less than the amount of the home loan and not come after the homeowner for the losses?
Simple: to save time and money.
When a loan goes into foreclosure most lenders will only get a Realtor in the area to give a "broker's options of value". That Realtor doesn't normally inspect the inside of the home. If the lender forecloses on that property they will sell it "as is" and they will say they don't know the condition of the property.
But if before the lender owns or sells the property the lender gets a contractor's estimate for $35,000 of repairs required, they should disclose it. Note: a bright investor paid for that very detailed repair list. Completed by a friend that is a very expensive contractor and who has inspected every inch of that property. No, the lender would not be surprised to learn the investor and his handyman can complete the repairs required for $5,000. But the lender doesn't have a handyman.
Now, let me restate. If the lender knows about the need for the repair they should give (not must give) notice of the known condition of the property to all potential buyers. That cuts the market value of the building.
At the same time the lender will receive from the investor a very, and I mean very, conservative appraisal also paid for by the investor and is complete with the contractor's estimate for repairs of $35,000.
So here are the lender's problems --his Realtor's value of property is $195,000 but there was no interior inspection, just some photos from the street and some comps. The lender has been given an investor paid for appraisal and the value is $160,000 as the appraiser has a copy of the contractor's cost of repairs and made adjustments to the value.
The lender knows if he orders a full appraisal that his appraiser will also be handed the $35,000 list of repairs. So the lender believes the property will sell at a discount because of the condition of property; and they must pay a Realtor a 6% commission; and pay their part of the closing cost; potential liability of vandalism; mold developing in vacant homes; and depreciating values. Plus all the time that takes to close an escrow; and the loss of interest each day on the money they have in the loan. Add management time and expense. That adds up to big loss.
The bank may accept an offer of $140,000 or less. There is an old saying in banking: "Your first loss is your best loss."
The lender will require a detailed accounting of the transaction. There can be no cash to the seller and the Real estate sales commission can't be over 5% --each lender has their own commission rules. The lender will require a net cash out estimate from the escrow company handling the sale in order to accept the deal.
If there is a second loan the investor must offer some money to buy that loan, but normally no more than 10% of lender's balance. Keep in mind the 2nd will get wiped out if the first lender forecloses, but they need some incentive just to do the paperwork.
Some lenders will allow $500 to be paid out of escrow funds to the junior lender but in every case we must make a deal outside the escrow to buy the junior loan.
If investors buy the second there will be no 1099 to the property owner.
Now you have a deal.
The borrower is off the hook for any loss the bank takes as they accepted the Short Sale. Perhaps the investor will give the seller some cash and extra time to move. In some States the only collateral for Real estate is the property and the lender cannot sue the borrower for any loss. If you're not sure about your State, email or call and we will give you the rules that apply in your State or the State the property is located.
Here is what we do --we ask the investor to complete a very detailed list of information on the property and area, we review that information with the investor and create a plan to purchase.
We make a proposal to the lender using what we call the poison pill approach.
Keep in mind it's a lot less work and risk for the lender to take our offer. The Department Manager of the lender will use our proposal to justify the sale price and protect his job.
So how do you make money? Spread the word. Tell current and prospective investors about Short Sale profits and they will give you loan after loan. Buy a property or two, or three.
One thing is sure: lenders are tightening their underwriting guidelines and rates, and foreclosures are increasing. All the while property values are decreasing in many parts of the country and every mortgage broker will need to explore new ways to stay profitable.
Private Money Loans
These loans are funded by individuals, not a bank.
EQUITY LOANS - An equity loan is a loan that is mainly based on the equity of your property. Very low credit scores are not a major problem. Foreclosure or bankruptcy bail out loans are OK - Funds can be used for any purpose. Maximum loan is 65 % of the value of your property. Example: value of your property $100,000 - maximum loan $65,000. Terms of loans are quoted on a case by case basis by the lender. If you have an interest in a loan, let us know and we will refer you to a private money lender that lends in your area.
We are not mortgage brokers and offer this program as a public service.
Credit Report Repair
Richman & Associates, Inc. are confident that you will find the solution to your bad credit report with Lexington Law. No-compromise credit report repair is what they offer. The results are nothing short of amazing.
Our affiliate, Lexington Law is a law firm specializing in repairing credit reports. They have helped over 200,000 Americans repair their credit reports by removing inaccurate, misleading, or unverifiable information. From bankruptcies to charge-offs to tax liens, they have challenged virtually every credit problem under the sun - and deleted over 500,000 items last year alone.
Lexington Law are good at what they do because they believe in their work, because they enjoy what they do and they're committed to their clients. And that means they can get you results you can count on, results that can literally turn your life around.
Their service is engineered from the ground up with credit report repair in mind. As a client you will find that they leverage their entire arsenal of credit experience and powerful strategies on your behalf.
As all financial services professionals know, without the right credit scores, you can't help your clients get the best loans, insurance policies, or their dream home. Lexington Law is happy to work with financial professionals to help repair their clients' credit reports.
The most important reason for the program is to help your clients improve their credit scores so they can get the loan they want.
You or your clients will work with a real law firm and will have their own paralegal that will walk your clients through the process of repairing their credit.
