Need Advice - Initial Paperwork Questions – For an IndyMac SS:

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Permalink Reply by Linda Baron on January 26, 2010 at 2:58pm

Mitchell Gilbert ...the first question is are you a realtor or an investor/flipper trying to do a deal? It sounds like you need assistance from an experienced buyer agent "short sale" realtor. You've come to the right place at ShortSaleSuperstars. I'm going to make a few assumptions -forgive me! (1) you are not a realtor and (2) you need money or a way to document qualification. Please note that there is a group, Old School Title -they might be able to help you with documentation -at a cost for flipping. Most importantly you must have the documents which disclose that you are going to flip and provide these to the seller of the property. It's a bit more involved but it's a starting point. Rules have changed regarding "holding time before flipping" -check it out.

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Permalink Reply by Mitchell Gilbert on January 26, 2010 at 3:17pm

Linda,
Thank you for your reply. Your assumptions are correct, I'm not a Realtor I'm an investor. I do have the paperwork with all the disclosures for flipping, and I recorded a memorandum with the disclosures at the county recorder. I'm looking for help with the initial package to IndyMac. Do you know what is needed when the bank asks for the ‘estimate settlement statement', they are requesting it be sent with the rest of the SS package? Also, since I'm an investor do you have any recommendations on how I can provide the bank a proof of financing (Pre-qualification letter)? They're asking for this to be sent with the SS package as well.

Linda Baron said:

Mitchell Gilbert ...the first question is are you a realtor or an investor/flipper trying to do a deal? It sounds like you need assistance from an experienced buyer agent "short sale" realtor. You've come to the right place at ShortSaleSuperstars. I'm going to make a few assumptions -forgive me! (1) you are not a realtor and (2) you need money or a way to document qualification. Please note that there is a group, Old School Title -they might be able to help you with documentation -at a cost for flipping. Most importantly you must have the documents which disclose that you are going to flip and provide these to the seller of the property. It's a bit more involved but it's a starting point. Rules have changed regarding "holding time before flipping" -check it out.

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Permalink Reply by Maria Evans on January 26, 2010 at 4:46pm

What you plan to do is not legal. You can't buy on a short sale having another buyer ready to close just to make a profit.

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Permalink Reply by Mitchell Gilbert on January 26, 2010 at 5:33pm

Maria,
I was not aware that doing this was illegal. If that's the case I'll just not do the deal. Can you tell me under what laws doing these types of deals are illegal? I know of people doing deals like this, they do them with legal paperwork that fully discloses what is going on so everything is transparent. And the contract is recorded. I'd like to research & read the law and make sure that the people I know are aware of this. As far as my deal is concerned, I never mentioned anything about making a profit nor having buyers ready to close. In my deal I have a few potential buyers that are interested in the property. Since I have no way of knowing what the BPO will be I can’t even be sure I can negotiate this deal to a point where any of the buyers would be interested. -Thanks

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Permalink Reply by Sam Purtle on January 26, 2010 at 6:58pm

Mitchell

I have to disagree with Maria on this. There is both illegal and legal flipping that goes on across the country everyday. I believe that if the lender has been provided full disclosure and they agree to the short sale, then there is not an issue. I would check with the title company/attorney you are planning on using whether they allow simultaneous closings and how your transaction should be structured. I personally know several real estate investors in Phoenix AZ who are utilizing a technique which implements a homeowner trust. Several others utilize option agreements. What determines if a transaction is legal or not in my opinion is arms length v. non-arms length.

As far as the estimated closing statement (aka HUD-1) that is needed, this documents summarizes how the transaction will be structured, what liens are being paid, closing costs, tax prorations, etc... a good resource is the HUD-1 discussion board located here on this site. http://www.shortsalesuperstars.com/group/hud1
There is a HUD-1 in a fillable PDF you can use as well as a link to a website which will prepare a HUD-1 for you. In my area I simply request that the title/escrow company I plan to close with prepare a pre-liminary HUD-1 for me which I in turn submit with my short sale package.

Hope that helps

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Permalink Reply by Mitchell Gilbert on January 27, 2010 at 1:49pm

Sam,
Thanks for your valuable advice!

Sam Purtle said:

Mitchell

I have to disagree with Maria on this. There is both illegal and legal flipping that goes on across the country everyday. I believe that if the lender has been provided full disclosure and they agree to the short sale, then there is not an issue. I would check with the title company/attorney you are planning on using whether they allow simultaneous closings and how your transaction should be structured. I personally know several real estate investors in Phoenix AZ who are utilizing a technique which implements a homeowner trust. Several others utilize option agreements. What determines if a transaction is legal or not in my opinion is arms length v. non-arms length.

As far as the estimated closing statement (aka HUD-1) that is needed, this documents summarizes how the transaction will be structured, what liens are being paid, closing costs, tax prorations, etc... a good resource is the HUD-1 discussion board located here on this site. http://www.shortsalesuperstars.com/group/hud1
There is a HUD-1 in a fillable PDF you can use as well as a link to a website which will prepare a HUD-1 for you. In my area I simply request that the title/escrow company I plan to close with prepare a pre-liminary HUD-1 for me which I in turn submit with my short sale package.

Hope that helps

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Permalink Reply by Paola Lopez De Armentia on February 25, 2010 at 1:07am

On the HUD always pad the title fees, lump all the title fees (settlement, re conveyance, doc prep, etc) into one and leave the title insurance on one line. Add 350 for a whaterhold 200 in estimated assessments. Prorate taxes and other per diem liens at least 6 months out to have enough money left over to cover anything that may come up. See attached.

As far as Proof of funds have your had money guy submit a letter that says you have funds sufficient enough to fund real estate transaction at the property located on..... and have it be on letterhead. See attached.

Dont call it flipping, call it back to back closings. Its totally legal, just make sure you over disclose to the seller and bank to cover all your bases and use an affidavit of understanding and other forms.

Attachments:

• Proof of Funds Letter(2).docx, 38 KB
• Green HUD 380k.xlsx, 23 KB

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