Making Money Helping Sellers: The 6 Things You Need to Know

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Making Money Helping Sellers

• The 6 Things You Need to Know to Make Your
  Fortune in TODAYS Foreclosure Market

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The 6 Things You Need to Know

• How todays foreclosure market is different than
  it was 10 years ago
• How the foreclosure process worksand where YOU
  can profit
• How to find the deals

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The 6 Things You Need to Know

• 4. How to buy at a discount BEFORE the auction
• 5. How to buy foreclosures without using YOUR
  money
• 6. How to profit once youve tied a deal up!

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1 Todays Foreclosure Market Really is New

• The typical home loan, 1993
• 30 year fixed rate
• 5-20 down
• secured by a first mortgage
• made to a borrower with average to high credit,
  or government-insured

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So when a home owner in 1993 got behind on
payments

• It was usually because of a financial or personal
  crisis
• He had enough equity to offer his property at a
  below-market price for a quick sale to avoid
  foreclosure!

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1 Todays Foreclosure Market Really is New

• By 2005
• ARMs and interest-only loans were the largest
  part of the mortgage market
• Today as many as two-thirds of home buyers are
  taking out variable rate mortgages, gambling that
  interest rates won't rise faster than their
  ability to payConsumeraffairs.com, 5/05
• The dramatic increase in the prevalence of
  interest-only loans, as well as the introduction
  of other, more-exotic forms of adjustable-rate
  mortgages, are developments that bear close
  scrutiny. To be sure, these financing vehicles
  have their appropriate uses. But to the extent
  that some households may be employing these
  instruments to purchase a home that would
  otherwise be unaffordable, their use is adding to
  the pressures in the marketplace." --Alan
  Greenspan, 9/05

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Look at the Effects of Rising Rates on Payments!

• Payments on a 150,000 loan, 30 year loan at
• 5 interest801.89
• 6 interest894.85
• 7 interest992.17
• A 2 rate increasea 24 payment hike!

Rates on a typical arm can go up this much in 1
year
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1 Todays Foreclosure Market Really is New

• By 2005
• No Money Down Loans were the Rule
• an eye-popping 43 of first-time home buyers
  purchased their homes with no-money-down loans."
  Forbes Magazine, 3/04

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1 Todays Foreclosure Market Really is New

• By 2005
• The Subprime loans market exploded (then
  imploded!)
• A subprime loan is 10 times more likely to
  default than a conventional, prime-rate
  loan.The Cleveland Plain Dealer
• the subprime sector has grown from 150 billion
  in 2000 to 650 billion today, about 20 of the
  overall marketUSA Today, Feb. 8, 2007
• Thanks to home equity loans, easy 2nds, and 125
  cash-out loans, owners have MUCH less equity
• Americans borrowed 705 billion against their
  home equity in 2006, vs. 266 billion in
  1999Economist.com

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The other factors

• Historically high homeownership ratesmore loans
  to go into default
• Flat/falling house prices throughout the US
• Higher interest ratesmedia-induced real estate
  bubble panicfewer buyerslonger time on market
• Although the Texas real estate market is healthy,
  homes don't sell fast enough to allow most owners
  to avoid foreclosure. San Antonio Express News
  8/06

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So when a borrower in 2008 gets behind on
payments

• Its just as likely because of an adjustment in
  his monthly payment as that he had a financial
  crisis
• He must sell for full price (or full price) to
  cover his mortgage
• He cant sell because there are fewer buyers
• And so he goes into foreclosure and loses the home

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All of Which Brings Us To

• The highest overall number of loan defaults years
• A banking system that is straining to deal with
  huge numbers of bad loans and REOs
• Desperate sellers who believe that they are out
  of options
• and it will get WORSE, not BETTER, in the next
  3-5 years!

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Nationally

• We're all going to have to be more creative in
  the next 12 to 24 months" in selling foreclosed
  homes, says Chad Neel, president and chief
  operating officer of Fidelity National Asset
  Management Solutions, a unit of Fidelity National
  Information Services Inc., Jacksonville, Fla. Mr.
  Neel's company helps lenders manage and sell
  foreclosed homes. Wall Street Journal, Nov. 30,
  2007

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More news

• The number of U.S. homes that slipped into some
  stage of foreclosure in 2007 was 79 percent
  higher than in the previous year, a real estate
  tracking company said Tuesday. Many homeowners
  started to fall behind on mortgage payments in
  the last three months, setting the stage for more
  foreclosures this year. MSNBC.com 1/25/08

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More news

• A report released Monday by First American Core
  Logic rates foreclosure risk for 381 metropolitan
  areas, and found that the risk of foreclosure has
  jumped 22 percent from January 2007, and 9
  percent from three months ago.
• The Core Logic report speculated that foreclosure
  risks may get a lot worse, and stay that way for
  a long time.
• In the wake of recent speculation that the United
  States economy may be entering a recession - or
  is already in one - the report stressed that
  defaults continued rising for almost 2 years
  after the end of the last recession in 2001.
  Based on that history, Core Logic expects that
  foreclosure risk will continue to increase over
  the next 18 months, at least. --CNNMoney.com
  January 28th 2008

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More news

• New foreclosures increased 30 from the 2nd to
  3rd quarter of 2007
• New foreclosures increased 51 from the 3rd
  quarter of 05 to the 3rd quarter of 06and 100
  from 3rd quarter 06 to 3rd quarter 07
• In November 2007, 446,726 properties nationwide
  entered some stage of the foreclosure process
• 1.3 million households received some kind of
  foreclosure notice in 2007
• This represents 1 new foreclosure filing for
  every 99 households nationwide
• Source RealtyTrak

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And locally

• Indiana ranks 10 among all states in number of
  foreclosures
• More than 1 in 60 home owners in Indiana received
  some sort of foreclosure notice in 2007
• There are over 16,000 bank-owned properties in
  Marion county alone

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Illinois SB 2349 (full text at
www.ilga.gov/legislation)

• AKA The Mortgage Rescue Fraud Act
• Applies to people and companies offering
  forbearance or loan modification services
• Creates requirements and disclosures for these
  services and provides for penalties if not
  followed
• Applies to investors who buy foreclosures and
  lease back to the sellers
• Creates disclosures, right of cancellation of the
  contract, and limits the price of resale to the
  seller to 125 of the purchase price. Also
  requires the investor to pay the seller at least
  82 of FMV if the seller cannot repurchase the
  property.

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And locally

• Cuyahoga County, Ohio, which includes Cleveland,
  has more than 16,800 homes that have been
  abandoned because of foreclosures. Infoshop
  news.com 1/27/08

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Our Goal as Real Estate Entrepreneurs

• Should be to grab this opportunity (it wont last
  forever!) by learning all the ways to help these
  desperate sellers, while making a fortune in the
  process.

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The Foreclosure Summit

• Everything You Need to Know to Profit from
  Todays Exploding Foreclosure Market
• More than 20 National, Regional, and Local
  Experts in early-morning to late-night workshops
• May 2-4, 2008 (Bonus Day May 1)
• Adams Mark Hotel, Indianapolis, In.
• 1,695 per person, 1,995 per couple

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2 How a Property Makes its Way Through the
Foreclosure Process, and How to Make Deals at
Each Stage of the Game
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3 Reasons to Know the Process

• Because WHOS INVOLVED depends on where the
  property is in the system
• Because how you FINANCE the deal depends on where
  the property is in the system
• Because theres a way to make money at every
  stepbut HOW depends on where the property is in
  the system!

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The Foreclosure Process(as most investors see it)
Late Payment
Sheriffs Sale
You Buy
Bank Buys
You Buy
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The Foreclosure Process (as it really is)
Late Payment
Owner Sells
Owner Catches Up
Notice to Borrower
Owner Files Bankruptcy
Forbearance Agreement
Debt Reaffirmed
Property Surrendered
You buy note
deed in lieu?
Sheriffs Sale
Payment plan
successful
unsuccessful
successful
unsuccessful
Bank Buys
You Buy
Bank lists with agent
Insurer sells
Bank sells from REO dept
Bank gives to insurer
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The Foreclosure Process
Deal with Owner Lender
Late Payment
Owner Sells
Owner Catches Up
Lender Gets Judgment
Deal with Trustee
Owner Files Bankruptcy
Forbearance Agreement
Debt Reaffirmed
Property Surrendered
Note Sold
Deal with Sheriff
deed in lieu?
Sheriff Sale
Payment plan
successful
unsuccessful
successful
unsuccessful
Deal with Bank
Deal with Agent
Deal with Agent
Bank Buys
3rd party buys
Insurer lists
Bank lists with agent
Bank gives to insurer
Bank sells from REO dept
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3 How to Find Foreclosure Deals

• The best time to find them BEFORE the suit is
  filed
• The best place to find them foreclosure filings,
  probate, agents, attorneys
• The best way to find them get them calling YOU!

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Why Owners Get Behind
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A Real-Life Example
Price Ave, Cincinnati 5 room, 3 bedroom 1
bath Rental-type area Called from a building
order mailing
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A Real-Life Example
Purchased by Mr. Mrs. Clark in
1950ish Refinanced in 2002 for 42,000, subprime
12.5 interest loan Mrs. Clark developed
dementia, all proceeds went to living expenses
and her care
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By February 2005, the Property is Here
45,000 ARV 15,000 in Repairs Needed Vacant,
vandalized, order to board up
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By February 2005, the Seller is Here
10 months behind on first mortgage, balance
49,652 2 years in arrears in taxes, balance
2,000 Total Owed 51,652 Total
arrearages 7,455
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And We are Here
Owner wants to sell How can we buy?
Late Payment
Owner Sells
Lender Gets Judgment
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4 How to Create Equity in Pre-foreclosure
Properties

• Since most pre-foreclosures have no significant
  equity, you MUST create it.
• The rise in bad loans also is leading to a pick
  up in so-called short sales, in which a lender
  allows the property to be sold for less than the
  total amount due and often forgives the remaining
  debt. For the lender, the process can be shorter
  and less costly than foreclosing, especially in a
  declining market. AOL Money
• There are 2 ways to do this short sales and
  buying notes
• If you dont know how to do them, youll have to
  walk away from 99 of the deals out there
• If you dont know how to do them RIGHT, youll
  drive yourself nuts!

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Back to Price
ARV 45,000 Repairs 15,000 Balance owed on
mortgage back taxes 51,652 Profit Potential
arrearages are paid in full -21,652 EXCLUDING
holding costs!
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After the Short Sale

• First Mortgagor
• Owed 49, 652 Accepted 8,000
• County Treasurer
• Owed 2,000 Accepted 2,000
• Total purchase price 10,000
• Plus Repairs 15,000
• 25,000
• Profit Potential 20,000!

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But what if

• The owner wanted to keep the property, but
  couldnt pay the arrearages OR
• The owner didnt want to sell OR
• You live in a state where its difficult or
  impossible to do short sale?
• Buy the Note!

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Review

• First Mortgagor
• Loan balance 49, 652 You Pay 8,000
• Tax Assessor
• Loan Balance 2,000 You pay 2,000

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Now What?

• Option 1 offer the owner the option of giving
  you a deed in lieu of foreclosure in return for
  total debt forgiveness
• Result You buy the property for 10,000

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Now What?

• Option 2 offer the owner the chance to keep the
  property. Restructure the loan like this
• 1st mortgage
• Old New
• balance 49,652 35,000
• Interest rate 12.5 7
• Payment 475.31 231.51
• Balloon none 5 year

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Option 2 results

• If the owner makes the payments
• You paid 10,000
• You are owed 35,000
• You get payments of 231/mo
• For a return of 27.8 per year
• PLUS 22,945 cash at yr 5
• If the owner defaults
• You get a deed in lieu of foreclosure and buy the
  property for 10,000

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5 How to Buy Foreclosures No Money Down

• TIME is always of the essence!
• Being able to close FAST makes or breaks your
  deal
• There are SOOOO many dealsyoull NEED other
  peoples money to close them all!

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Top 4 Ways to Buy Foreclosures Using OPM

• Subject to the existing loan
• Private Lenders, at 8-10 Interest
• Hard Money Lenders, at 14-16 interest
• Partners using retirement funds to get the
  profits tax free

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Back to Price
Purchase Price 10,000 ARV 45,000 Repairs
needed 15,000 What Now?
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6 How to Get the Profit Out

• You need to be able to evaluate EACH deal to see
  the best exit strategies!
• Wholesale?
• Retail?
• Lease/Option?
• Hold for Rental?

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What Now?
Fix and Sell Profit Potential ? Fix and
Lease/Option Profit Potential 25,000300/mo
cash flow over 1-2 years Fix and Rent Profit
Potential 20,000 equity appreciation 300/mo
cash flow Tax breaks
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What Now?
Wholesale Profit Potential 5,000 In 10 days or
less!
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What Really Happened!
Sold the contract to Linda for 5,000 Her Total
purchase price 15,000 Her Total
investment 30,000 Her profit 15,000cash
flow TAX FREE!
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The Foreclosure Summit

• Everything You Need to Know to Profit from
  Todays Exploding Foreclosure Market
• More than 20 National, Regional, and Local
  Experts in early-morning to late-night workshops
• May 2-4 2008 (Bonus day May 1)
• Adams Mark Hotel, Indianapolis
• 1,695 per person, 1,995 per couple

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Youll Learn The Basics

• How to Find More Desperate Sellers than You Can
  Handle
• How to Negotiate Big Discounts from Banks
• How Buy and Sell Notes and Mortgages
• How to Find the Money to Close Your Deals in Days

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And the Details Your Competitors Dont!

• How to Use Your IRAor Someone Elsesto Make
  Tax-Free Profits
• How to Write Contracts on Foreclosure Properties
• How to Buy Properties from Sellers in Bankruptcy
• How to Invest in Tax Liens and deeds
• How to Negotiate with Sellers and Lenders

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And even more details

• How to Assign Unassignable Bank-Owned Contracts
• How to Write offers on REO properties (that will
  actually be accepted)
• How to Take Over Unassumable Mortgages
• How to Invest in Commercial Foreclosures
• How to Select the Right Entities, Rehab
  Foreclosures, and MUCH MORE!

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With These National Experts

• Donna Bauer, The NoteBuyerHow to buy bad
  paper for pennies on the dollar
• Don Derosa How to Buy Foreclosures No Money down
• Lee Phillips, esq How to Protect Your Deals (and
  Your Assets)
• Vena Jones-Cox and Missy McCall-Hammonds How to
  Run Your Foreclosure Business Like a Business

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With These National Experts

• Kathy Kennebrook How to Attract More Motivated
  Sellers than You Can Handle
• Caryn McKinney and Mark Klee How to Buy
  Properties from Bankruptcy
• Larry Goins How to Flip Foreclosures in Just
  Days

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Your 1,695 Tuition Includes

• 3 Full Days of Foreclosure Secrets PLUS
• 2 Meals a Day, Plus the Networking Banquet on
  Saturday Night!
• The Right to Bring a Spouse or Partner (sharing a
  room) for Just 300 More!
• PLUS Thursdays Detail-Packed All-Day Workshop
  Successful Short Sales with Donna Bauer, just
  399 more

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STILL Cant Decide?

• Register now, and Well Pay For Up to 4 Nights
  at the Adams Mark!
• (1st 175 Registrants Only)

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Sign Up Now, and Save Even More!

• Grab our ACT NOW DISCOUNT and Save 400!
• Just 1,295 per person,
• 1,595 Per Couple
• PLUS Get Donna Bauers All-Day Thursday Class,
  FREE!

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Dont need a hotel room?

• Save 300 More
• Just 995 per person,
• 1,295 Per Couple!

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Our 100 Satisfaction Guarantee

• The Foreclosure Market WILL Boom, and We WILL
  Teach You How to Make a Fortune Helping
  Sellersor You Can Claim Your Entire Tuition for
  a FULL 30 DAYS

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Extra Special Sign Up Tonight Bonus

• Register Today, and get the Entire Foreclosure
  Summit Audio Course in MP3 Format for FREE!a
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See You At The Summit!

• www.ForeclosureSummit.com