Underwater Mortgages

A homeowner contacted me about his situation.  He and his wife were thinking of moving to a different area and a smaller house.  His payments are current, but they are underwater on the mortgage.
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The house has gone down in value and the market value of the house is now less than what they still owe.  What strategies are open to them?


A great number of American homeowners are in this same position.  They are making their payments.  They are not particularly strapped or in danger.  But they are wanting to change for one reason or another, but they are trapped in this dilemma.  How can they pay off their mortgage if they sell and move?


There are lots of ways to buy Real Estate.  Here are some possibilities.


Short Sale – Credit Hit
In the traditional system, a Short Sale has become a regular procedure now.  It usually takes a long tine, but FHA/HUD orders recently have (theoretically) shortened the time a bank has to reply to a SS offer to 60 days.  In reality, it is still taking longer in many cases.  How can they enforce such rules on banks?


But you will take a Credit Score hit for a Short Sale.  It is not nice, not quite as bad as a foreclosure, but do this only if you are really in dire straits.


Buyer Financing Delay
Then you have the delay of financing approval if the buyer is getting a conventional loan.  This usually takes 3 months or more.  And you have no assurance during the process that it will really go through.  Meanwhile the homeowner has the home off the market under the pending contract.  If that buyer’s loan is turned down, you start all over.


Sell Subject to the Current Financing
One well-established longtime method is still not well known to the Realtor world.  You can keep your current mortgage in place and sell the home subject to your current mortgage.  Your contract provides that the buyer will make payments on your current mortgage as the payment plan for the purchase.TexasHomeStrategies-Arlington


There are special procedures for this, which vary a little in each state.  This is very tidy and clear in Texas.  The Texas Property Code has a specific section that details what is required for this procedure.  This is provided for on the standard HUD closing statement, line 503.  Standard  cookie-cutter Title companies might not be experienced in using this method, since they are generally oriented to the limited Realtor format.


An investor may be able to buy your home when no one else can.  Such a Real Estate buyer in your market might be willing to take over your payments and buy the house subject to the current financing.  In this sort of purchase, the current mortgage would stay in your name, but the purchaser would make your payments.


This will supporting your credit and leave you free for other options.  This would be done with legal processes to cover and protect you.  The payments should be set up through a third-party servicer so you can check online to be sure everything is going well.


Paperwork will provide for contingencies protecting you in case anything happens.  Lots of Title Companies are very skilled at Subject-To and other alternative procedures for buying Real Estate.  Check around.  They will know the Title Companies who can do this right.CAHP Badge web 1500


Subject-To is especially helpful if your home needs lots of repairs, or you have a crisis that requires to sell and move right way.  This for of sale can be a longterm or short-term solution for your problem.


Texas Home Strategies provides free market information, evaluation and strategy suggestions for each situation.  We buy homes and we are an Affordable Housing Provider.  We can make you an offer or suggest other strategies.


Call me and I can personally work with you to see what strategies might meet your needs.


Texas Home Strategies is an Affordable Housing Provider.
We work to match up buyers and sellers for mutual benefit.
We Buy Homes and Close Quickly.
We assist sellers who have trouble selling their home,
 and we work with buyers who cannot qualify for a bank loan.


How Can we help you?
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Loan Qualification and Owner Finance Alternatives

If you are house hunting, you probably know you will need to get pre-approved  for a mortgage if you are planning to get a bank loan.  It is harder than ever to qualify.  New rules on mortgages under Dodd-Frank act just went into effect on 10 January 2014.

You should order your credit report beforehand yourself, to check for mistakes/fraud, fix errors.(Ref @Redfin http://rfn.co/182JqkV)

Home loans from a bank are still hard to qualify for and approval takes quite a while, adding inconvenience, stress and delay for both seller and buyer.

As an alternative to a traditional bank loan,  you can ask the seller for Owner Financing. Find an agent who can handle this.  Some are unaware of the possibility.  Some have had special training in this alternative financing approach.

Mutual Benefit

There are several ways to structure such a sale and the promissory note that will provide benefits to both buyer and seller.  This can be negotiated and concluded in a short time and closing can happen much more quickly.  The home sells fast, the new owner can move in quickly, and all that stress and uncertainty is avoided.

Only a small proportion (estimates are 14-20%) of applications for a bank mortgage loan are actually approved.  The pre-approval letter the bank gives you actually in no way obligates the bank to provide your loan.

This presents a hurdle of time and extra cost and money for the buyer, but the seller also risks loss, because the house is off the market while awaiting this approval, when they could be receiving other offers.

You may benefit from Owner Financing on fully remodeled homes offered by investors.  This is their business – they renew homes, and fill a gap in the market that banks and the government cannot.  Often these sellers will offer Owner Finance loans.

This is especially helpful for buyers with no credit history, but with cash for a good down payment and good jobs or income.

Personal, Custom Service

Self-employed persons also have difficulty meeting traditional income requirements for a bank loan.  A more personal private seller like the investor can take into account your total financial picture, and customize Owner Finance offers.  Investors are able to  make creative adjustments in their approaches.

Credit Building They also commonly offer Credit Building services, and may able to improve or build your credit by the way they report on your mortgage payments.  Ask the seller about these extra benefits.  With this approach you can move towards a Refinance loan at more favorable terms and easier qualification than an original bank mortgage loan.

Texas Home Strategies is an Affordable Housing Provider.
We work to match up buyers and sellers for mutual benefit.
We Buy Homes and Close Quickly.
We assist sellers who have trouble selling their home,
and we work with buyers who cannot qualify for a bank loan.

How Can we help you?

Originally posted 27 November 2013
Updated 30 January 2014

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On Shutting Down Fannie Mae and Freddie Mac

We’ve been quiet here for some time, watching the market and analyzing trends, while adjusting to the changing investment climate. On 25 June A new bipartisan bill was introduced in the US Senate called the Title Insurance Requirement Included in GSE (Government-Sponsored Enterprise) Reform Bill. A similar bill is in the House.

Some have touted the bill as a relief from Federal involvement in the business sector since it will close down Fannie Mae and Freddie Mac with their government guarantees of mortgages. But a new set of regulations move in to fill this gap, and I have not heard much discussion about that side of it. A new layer of government oversight is being established and a new agency to watchdog the related industries and transactions.

What Will Really Happen? What Will Really Happen? But it appears provisions will make it harder for small company investors to work in the market. There is an underlying control concept despite the surface appearance of pulling government back. In light of the Dodd-Frank nightmare gradually extending its implementation tentacles throughout the economy, it is difficult to evaluate fully the positive implications of this new move.

The announced provisions of this bill appear to be ignorant of the whole non-conventional industry that has taken up a lot of slack and fill gaps after the conventional industry blew up in 2008. This seems like another (perhaps) well-intentioned overreach without a full picture of the economic system now operating. It appears to favor only high-dollar entrepreneurs, and big banks, which caused the problem in the first place.

For Texas, many, if not most, of these Federal regulations and requirements are redundant at best. Texas already has more stringent controls nad limitations in place to protect consumers against Real Estate fraud. Many think these are too narrowly focused and produce negative implications for the small business sector.

The Texas Property Code already requires notification to the primary lien holder in the case of transfer of title while keeping the existing mortgage in place. There are clear provisions to protect the homeowner/buyer nad the interests of a lender while leaving the parties in the transaction sufficient freedom to construct transactions as needed for special circumstances or individual needs.

It will be interesting to see what format of reporting may be required by this federal approach. The Texas Law is already very specific, protecting the consumer while enabling creative approaches to Real Estate problems, which cannot be easily micro-managed nationally.

Abolishing FM & FM
House Discussing FM & FM
More than $160 Million in Legal Fees to Defend FM & FM
Hedge Fund Suing Treasury over FM & FM

Texas Home Strategies is here to provide information and services to help home owners with problems, and to assist buyers who cannot get a traditional loan. Free consultation. How can we help you?

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Knowing Options – Making an Informed Decision

Your home has lost value, right? Owe more than what its worth? Need to sell quickly? Can’t do repairs?

In our tight economy, if you have to change jobs, you may not have time to wait till your house sells. What then?
Two mortgages?
Do repairs to get it sold? Even more money out of pocket!
How can you sell quickly and move on?

What options do you have?
You can list with an agent. How long will it take to sell to a bank-qualified buyer?
We are hearing only about 14% of applicants get approved. And it may take a while.

There are other options.
We may be able to buy your home, or find a buyer, or maybe you’ll want to lease it to us while we look for a buyer. You can move on to your new and better job, and your old house can make you money instead of costing you money!

Informed Decision
Time is of the essence when you get a good offer. THS can help with this. But investors we work with will work flexibly with the homeowner to meet the need.

We pledge to provide a fair and open evaluation of your home and the current market. We’ll share information and analysis with you, fully open, to enable you to make informed decisions!

How can a company make money if they then also will have to repair the house, market the house, show the house, get a loan-qualified buyer and such? Yes, a deal has to make sense for your buyer. All those factors have to be considered.

Similarly, you can avoid agent commissions and a long wait while you still have to continue making payments. We can look at a variety of strategies. We work with a network of investors who can buy homes nobody else will buy. There are different strategies that may meet your need.

We can close quickly to save you time, money and stress. We work with you to make a deal happen.

We will make a fair offer or find a suitable solution for your need.


Texas Home Strategies is here to provide information and services to help home owners with problems, and to assist buyers who cannot get a traditional loan.  Free consultation.  How can we help you?

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Sell Your Home in 7 Days: Creative Approaches to Current Real Estate Needs

Did you know you can sell your home in as little as 7 days?!

Buying a home involves some risk.  And even selling a home involves some risk.  But there are ways to minimize and control risk.

The traditional bank and mortgage system is designed to protect the banks from their risk.  There are other approaches that will protect you as a seller.  The Texas Property Code, as in most states, provides for many approaches to buying and selling real estate that are not used by banks and mortgage companies and the realtor selling system.  These are to your benefit.

Realtors use the same methods now to sell homes that they started with over 100 years ago.  We live in modern America.  This economy is different.  Texas Home Strategies can provide options to meet your situation.  We can look at different strategies to meet your particular need and situation.

Situations change.  We work with homeowners needing to sell, with financial pressures, maybe having trouble handling their mortgage.  We work with a network of real estate professionals look at creative strategies to help owners sell, protect their credit by avoiding foreclosure or bankruptcy or sell quickly.

We can match buyers to sellers, we make offers on houses or find investors or other cash buyers who can take distressed properties no one else wants and restore them.  Our partners include credit repair services for buyers who want a home but cannot qualify for a conventional loan.

We can suggest various strategies to facilitate a purchase while your credit score is building to the qualifying level for a conventional loan.  If you qualify for initial Owner Financing, you can get into your home quickly, then build credit for a refinance loan, which is easier and cheaper than a conventional initial purchase loan.

A few months ago, market information showed that only about 20% of people applying now for a bank loan get approved.  That number is now down to 14%!  I have even heard one anaylist report it is only 8% – only 8% of buyers who apply for a loan get approved?  Amazing!

This time delay in the long and arduous process of loan approval by a bank is also a great pressure on both sellers and buyers.

We can buy your home.
We can pay your mortgage.
You can sell quickly and make adjustments to your financial situation.

We never charge for any market information or services.  If we can’t buy your home or find a buyer, you owe us nothing.

We can find a buyer with our unique marketing techniques.  We match up sellers with buyers.

Ask about Owner Financing strategies for buying or selling, enabling deals that would not otherwise occur.  We solve problems.

Learn here how to

Texas Home Strategies is here to provide information and services to help home owners with problems, and to assist buyers who cannot get a traditonal loan.  Free consultation.  How can we help you?

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Working with Investors

One Real Estate blog commented that with all the Foreclosures on the market now, the best thing for property values is for an investor to buy your neighbor’s house, fix it up and sell it for top dollar.

This would solve your problem by taking away your liability to repair the house and continuing to pay for a house when you need alternative.  And by putting money into the home to renew it, the investor would then will raise property values of the other houses on the block.


What determines the value of a home?  What buyers are willing to pay.  In the current market so many homes need repairs or updating, many end buyers will move to a move-in ready home in preference to one that needs more work to get up to expectations.

When an investor rehabs a house, it raises the value of that home.  This raises the value of the whole block.  Investors are willing to buy and repair homes an end-buyer will bypass.  The longer a home sits for sale, the lower its value falls — along with the whole block!  So quick sale is important.


A company that buys homes has to make a profit to stay in business, right?  An investor wants to help a family with their housing needs, but has to eat too, right?  How can you afford to sell your house at the discount this often requires?

On the other hand, it saves you money and removes your financial liability.  You don’t have to make repairs.  It can actually cost you more to list your house and keep it on the market till it sells retail!  You can sell it now, avoid agent commissions and falling prices and your ongoing payments!  Quick sale at a discount may net you more!

Many owners owe more than their home is now worth on the market.  You may have to pay someone to buy your house?  There may be other ways to approach this.  An honest, confidential review can explore what other options might work to meet your need.

Texas Home Strategies assists homeowners and sellers to explore options open to them and to assist with difficult decisions.  Free consultation.  How can we help you?


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Bank of America Strategically Forgives Many Second Lien Mortgages

Bank of America has developed quite a reputation for being hard to work with on Short Sales and foreclosure properties they are trying to sell.  They seem to be trying to clean up their act and tighten up their procedures to make things happen.  We want to discuss one positive decision recently that will help many underwater home owners.

The good news recently is that Bank of America announced recently that it has sent notices to certain borrowers that they are forgiving second mortgage loans and issuing releases of those liens.

One colleague recently introduced me to one deal where that happened.  He called me about a deal he was working out with a homeowner who had two loans on his home for a total higher than the home is worth on the current market, if in top market condition.

With a lot of deferred maintenance that need to be done, the value of the home at Fair Market Value is very low.  By the time you figured the repairs and costs to resell the home, it was a woeful and daunting figure.

This homeowner recently did get one of those forgiveness letters from Bank of America, who owned both loans on his home.  So his second lien was cancelled and he was left with only the first lien mortgage with Bank of America.

Sadly, even this amount has him underwater.  My colleague worked with a Realtor to process the papers required for Bank of America to approve a short sale.  The bank has agreed to take less than now owed on the remaining first-lien mortgage.  How much less remains yet to be seen.

Like many homes, this one is way underwater, and needs lots of maintenance and updating to become a viable home for current buyers.  So after figuring repair estimates and costs for closing and reselling, we made a fair offer on the property.

We’ll see what Bank of America says.  It still takes quite a while sometimes to get a response to an offer on a Short Sale.  The banks are still stacked up with Short Sales and properties they now own after foreclosing (Real Estate Owned, or REO).

We commend you, Bank of America, for considering these beleaguered homeowners with two mortgages their home values can never cover.  Thanks for helping us move towards recovery.  Keep working on the weak links in the system like the puzzling example Phill Grove tells us about On the other hand, BoA makes some stupid decisions that hurt them as well as some of their customers, and the economy in general.  Real Estate investor and analyst Phill Grove tells of where a qualified case was turned down by BoA one recent instance.

If you are looking for a home for yourself, you cannot count on a Short Sale unless you are under no pressure to move quickly.  Be prepared to wait.  But prices on Short sales are more reasonable now, though still too high to allow for adequate repairs needed in most cases.

Sell Your Home Now
Buy a Home

Read More on Bank of America Second-lien Forgiveness:

Bank of America to forgive some second mortgages – Mr Williamsburg.com
Bank Of America Forgives Second Mortgages – Harris Real Estate University

Texas Home Strategies provides free consultation to inform home owners of market values and options and to assist with difficult decisions.  How can we help you?
682-325-8439   817-860-2811

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New National Real Estate Tax?

I continue to be amazed at all the stuff people make up and circulate over the Internet as fact and statistic.  I never knew so many people were perverse and devious.  Isn’t it amazing how some people will believe anything and circulate it without checking on its truth?  A friend asked me about a new one the other day.

Knowing I am involved in real estate, he wrote to ask about something a friend had told him, that there was to be a new 13.5% tax is starting in 2013 on all real estate transactions in the US.  I had not heard of anything this preposterous.

This sounded like an urban legend (something made up for fun or subterfuge to mislead).  I did some research from several angles to see what I could uncover about this.

I cannot find anything on this and have not heard anything previously about it.  There has been no bill passed I can find anything on that institutes a real estate sales tax to support part of the new medical care program.

It  sounds like a variation of an earlier confused email circulating a few months ago, but the figure usually mentioned was 3.8%.

There was a provision passed that defines a new Medicare support tax at the rate of 3.8% on capital gains. This apparently would apply to any real estate transactions which qualified for a capital gains profit, but this would basically exclude all family residences, since it is based on profit due to gain in value.

The existing capital gains exclusion for personal homes is $250,000 for an individual, $500,000 for a couple. This might leave 3% of homes that might be affected IF the dollar sale price yielded an actual profit after the purchase and expenses. The median price of family residences in the whole US was $154,700 as of January 2012. So the Medicare tax would not affect homeowner families except those who make a substantial profit on the sale of their home above the $500,000 mark.

The tax is on capital gains, so the hardest-hit segment would be traders of stocks and bonds, or perhaps commercial real estate transactions. But most of such transactions I hear about these days produce a capital gains loss, not a gain.

I am always on the lookout for news about legal and financial market trends affecting real estate.  I am open to information about real sources and news of import in that regard.

Comment added 6 September 2012.  More on this topic in another source:


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Investors and Property Values

Home prices are stabilizing in some markets.  In some markets and in some neighborhoods, prices are still falling a bit, and in some a definite rise has begun.  Foreclosures are still occurring and increasing in some markets.  They have slowed in some markets as banks are trying other methods to stop the hemorrhaging.

Lauren Holloway, a realtor and blogger for the Patch Network, covering Danville & Alamo, California, addressed falling home prices and property values related to foreclosures.

When No One Else Will Buy

Lauren commented, “If an investor buys your neighbor’s house at the foreclosure auction, then you got lucky: They will fix it up, stage it, and sell it for top dollar.”

I agree that the best outcome is often for an investor to buy the house, either at the Short Sale stage, at the foreclosure auction or as an REO direct from the bank.  If the distressed owner is lucky, he will make contact with an investor who can help with the owner’s problems.

An “investor” may be able to buy a house when no else can or wants to.  And they may be able to offer creative alternatives to solve the problem.  If such a Good Samaritan arrives in time, it may be possible to forestall the foreclosure, or even stop one in progress.

Then the homeowner won’t have to lose their credit rating with a foreclosure hit.  If you have any equity in your home, there may be a way to save it.  If the mortgage is upside down, options are fewer, and a Short Sale may be necessary, but time may not allow that.  There may be another way the traditional system does not provide.

Improving Neighborhoods

Investors are the primary force improving neighborhoods and helping first-time buyers or credit-challenged buyers get into a like-new home, while the banks make it harder and harder to borrow money.  And actually, savvy rehab and resale investors will price their homes at below the market to sell the house more quickly, and give the new owner even more equity value in the best house on the street!

As investors improve homes and neighborhoods, and raise home values, overall market prices improve while houses still sell at an affordable, comparably low price level.

And more houses sell faster through their multi-channel aggressive marketing.  You don’t usually sell a house very fast by just listing it on the MLS and waiting, hoping someone will call on it.  Average time to sell a home varies but in some areas it is 9-12 months.  Working through safe non-traditional channels, closing can come in weeks or even days.

Comments originally written on The Danville Patch, the Patch Network

Texas Home Strategies provides free consultation to inform home owners of market values and options and to assist with difficult decisions.  How can we help you?

682-325-8439   817-860-2811

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IRA for Investing: Build your retirement faster secured with Real Estate

Did you know your IRA can invest in Real Estate instead of volatile and fragile stocks and mutual funds?  In 2009 I fist learned about this possibility, and kept it in mind as I learned more.

This is a good, safe way to build your retirement package.  Even if something goes wrong, you have a deed to the property and the value is there.  With stocks, your money is at risk.  Your IRA can own a rental property or loan money to a company to rehab and resell a house.  You get a promissory note and a Trust Deed just like a bank.  Your IRA custodian manages the investment.

Some custodians are harder to work with, or require more paperwork; some are cheaper; some understand Real Estate better.

In 2011, we decided to put my wife’s retirement fund into Real Estate.  Through research and my Real Estate contacts, we had become acquainted with an investment company in Dallas called Diversified Metroplex Investors.  They buy distressed and down apartment buildings, and rehab them and turn them around.  They put together funds from private investors, many of whom invest with funds from their IRA.

I talked with others who were investing their IRAs in Real Estate, and talked with custodians of several companies who manage IRAs for people who want to invest in Real Estate.

We decide to invest in a new DMI venture in single family homes.  The company we chose as a custodian for a Self Directed IRA was IRA Services.  We rolled over Edith’s 403b fund into a new Self-Directed IRA with IRA Services.  This custodian was chosen because of a prior relationship with DMI, who facilitated the transactions and funding paperwork.

Other investors also loan our company money from their Self-Directed IRAs to buy properties to remodel and sell or rent out.

In February 2012, we rolled over my retirement fund with IRA Services as well, to invest in a single-family home rental  The rent money would build the IRA.  This experience did not go well.  Without the facilitation of DMI, I found IRA Service to be terrible in communication.

It was impossible to get to anyone who could even clarify what their paper instructions meant and make any decision.  Fortunately, we were buying from a development company with experience working with investors and IRAs.  This is their business model.  Otherwise this deal would have fallen through early in the game.

Even with Property Direct handling contacts with IRA Services to get straight what was needed for them to release my funds, it took us two months to get funding and documentation finalized to actually get the money to the owner we were buying from.

Property Direct, whose business model is remodeling and selling rented homes to investors with IRAs, said they have never had such a hard time from any previous IRA custodian they have worked with.

Despite our good first experience with IRA Services, facilitated by our investment partner DMI, I cannot in good conscience recommend IRA Services.  There are great companies out their who serve as custodians for Self-Directed IRAs investing in Real Estate.

Investing in Real Estate with your IRA is a great approach to build your retirement.  I am glad we learned about this avenue of investment personally and for our business.

Find out  more about Self-Directed IRAs here:

How to Buy Real Estate in Your IRA

Texas Home Strategies assists homeowners and sellers to explore options open to them and to assist with difficult decisions.  Free consultation.  682-325-8439

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