Concerning Forclosed Properties in need of Repairs

**pk797** · 11-08-2009, 08:53 AM

Hello guys little new to the forum - Looking for some specifc advice:

I'm looking at a forclosed home (2-family) in NYC. The home which is bank owned at this point actually is in pretty good condtion overall, recently renevated- interior/ exterior all new plumbing, electric, sheet rock, floors, walls roof, siding, etc..

Problem is that someone (previous homeowner I assume) decided to take some stuff with them when they left. This list of missing items includes both kitchens (everything including the proverbial kitchen sink(s) are gone, but all plumbing and electrial connections are still in place), all the light fixtues (wiring still intake), all the radiators in each room (again plumbing still inplace, but cut) and the boiler/ hot water heaters are also gone (all plumbing and wiring connections in place downstairs).

I am a NYC building Engineer by trade, Pre-Approved and have the capital to do this type of job, but am not a licened contractor and normally work for one company only. This is a side point as the bank is telling me I will need two loan in essence to secure this property.

One will be for the converntional mortgage iteself the second will be a mantiory renovation loan required to do the necessary repair work needed. As I said I have the finances and if it's legal the know how to do the necessary work myself, but am being told by the bank that that is not a opinion and that I have to get both loans through them, in which I will be charged points for the needed second part.

Is this how it's nromally done within the forcloser market? Do I have an opions here at all? or am I just stuck with what's being presented to me?

My other concern in this, is once I am forced to bring someone else to do the work that I then become subject to their timeline and reliablity, which could really leave me "out there" in terms of the mortgage payments each month while it remains unfinished / vacant.

**Greg** · 11-09-2009, 05:15 AM

You shouldn't have to get the loan from the seller/bank.

A rehab loan, available through different lenders, does require a licensed contractor to oversee the job.

Do you know one who will let you do the work?

**jasonthoele** · 11-10-2009, 08:24 PM

two loans is not necessary, in fact even if you get a 203k (rehab loan) it one loan all wrapped into one.

sounds to me that the lending may be the issue, sometimes the lender will not loan on properties that need extensive work.

**pk797** · 11-14-2009, 08:10 AM

The 203K loan is something I am definitely interested in, but this is a 2 unit (2-Family) home so it's not entierly clear to me if that will work or not?

**jasonthoele** · 11-14-2009, 09:24 AM

1-4 units is still considered single family in a lenders eyes even though it's multi units... check with a lender though as this is not my specialty.

**clemy** · 11-15-2009, 08:53 AM

How many lenders/mortgage brokers have you talked to? You mention just one "bank" in your post. Ask friends for lenders and mortgage brokers they have used and would recommend. Then talk to two or three more sources before you commit yourself. All banks/lenders are not the same.

**jasonthoele** · 11-15-2009, 07:15 PM

He's right, your options will also depend on your credit worthiness and DTI... talk to a direct lender first (Banks, etc) then go to the brokers at a last resort.

Best Regards,

Jason Thoele
Thoele Real Estate Group
Watson Touchstone ERA

**pk797** · 11-17-2009, 08:10 AM

[QUOTE=jasonthoele;69134]He's right, your options will also depend on your credit worthiness and DTI... talk to a direct lender first (Banks, etc) then go to the brokers at a last resort.

Best Regards,

Jason Thoele

Yes are both obviously 100% correct, but it is the seller (in this case Wells fargo) who is insisting on these terms - not me. They have gone as far as to express (no not in writting of course) that offers from outside lenders will not even be considered for these REO properties currently on their books.

Credit is not the issue for me (score is currently in the high 700's to low 800 ratings) I have litle to no overhead each month and I go full back on all my yearly income amounts as well. This is all their terms so far, hence the concern and questions??? Help!?! Me....!!! Please>>!

**Greg** · 11-17-2009, 11:38 AM

Wells Fargo is requiring you to go through them to get financing because they are afraid that a loan with another lender will not go through because of the problems with this house. This is a problem house. Lenders are very picky right now and deals are dying at the closing table because an underwriter got scared at the last minute.

This is not good for the seller as they now they will have to put the house back on the market and it now carries a stigma. The solution for the seller is to do the financing themselves.