Posted by Michael Morrongiello on October 28, 2004 at 18:48:14:
In Reply to: Create a second to stop foreclosure? posted by John on October 26, 2004 at 17:30:21:
John:
A borrower like this clearly has had some serious issues about not living up to their obligations....If you are thinking about "Creating" a Note that could be sold that would be in 2nd lien position, given the circumstances here; fauxgetaboutit.
If you have the capital to invest and you want to help this woman while also protecting and preserving your hard earned capital then as long as that 1st lien mortgage is a low interest rate long term fixed rate loan why not consider making a WRAP AROUND loan to her...?
You would advance her the $30K in cash but to protect your loan have her sign a $129K WRAP around mortgage to you. Now she will make her payments to you each month and you will in turn make the payments on the underlying loan. You will be in far better control this way and can also acheive a much higher yield. WHY? Well instead of lending her $30K @ 12% -14% or whatever you were going to charge on the 2nd lien, you can now earn 12% -14% interest on a balance of $129K and pocket the "spread" between what is still owed to the bank and what you collect.
To your success,
Michael Morrongiello