Details on money back at close duplex purchase Indpls IN
Just finished up on transaction concerning duplex in Indianapolis, IN . Here are the details and someone I would not ever use again for a note buyer as well.
Found listing in local paper - $26,000 Duplex Out of Pocket up front money - $400 for appraisial Cash back at close - $1028 Method of fiance - Private note of $40,800 mort 30 yr fixed at 11% interest balloon after 5 yrs icome on property - $970/mo. when both sides rented (one side currently rented)
Found listing for duplex in local paper called Indianapolis Star. Listed price was $26,000. This was Novemeber of 2001. Started with mortgage company called Mortgage Star which after less than two months sent me a letter saying *I* had withdrawn my application which I did not.
Less than a month later broker/agent was dealing with from Mortgage Star named Shawntina Archer contacted me and told me she was working for other company now called CaCarteret Mortgage (out of Centreville VA). Resubbmitted application, and over the course of the next SEVERAL months finally ending in late April I was promised over and over that there would be a close and that all was well just one more thing .. one more thing etc... Loan was for $35,000 (appraised value $50,000) mort over 30 yr fixed @ 8.5 % - locked in for months. Finally seller was getting tired of the waid and so was I after almost six months of delays. Called to tell agent that this had to close by end of April (about a week after call) or I was in danger of losing the property due to their delays.
Higher up individual in the company was called back and forth several times and told me again and again that it would close. Then finally with only a few days left in the month she told me out of the blue that it was not going to close. Her only reason given 'there are alot of underwriters and one of them must not have liked what they saw'. Had to finally call my attorney to try to get a better answer. They have till the 15th of this month to respond as nothing dramatic changed in all those months for the loan to suddenly be denied.
Beginning of May found a private note buyer via posting at America's Note buyers website. Had about five overall interested in the note - went ahead and dealt with the first that started any paperwork with although looking back I wish I had gone ahead and dropped him for another buyer.
Reason being is that when I first posted note the terms read as follows: $35,000 note at 8.5% over 30 yrs no prepay penalty. Sell for $30,000. The note buyer expressed interest in buying note - wanted it to be a $40,000 note with balloon in 5 years at 11% for $30,000. OK property would support it. Agreed.
Then after starting paperwork (promissory note, sales contract sent, title work started, etc) he comes back with oh by the way there is a penalty if this is paid off before two years. Gritted teeth and continued although was not liking the change since I had planned on refiancing after a year. Then later still he comes up with another oh by the way there is a $800 fee for processing that can either be paid at close or added to note. Went ahead and redid paperwork for third time at this point to include the fee.
Finally we get to close on May 22nd after starting at the beginning of May and all paperwork being approved by seller, buyer (me) and note buyer. Note now is for $40,800 at 11% interest mort over 30yrs with balloon in 5 yrs with 2 yr prepay penalty.
After close the note buyer STILL is hounding me demanding that the promissory note (which he created and sent to me) and the assignment of mortgage need to be redone . Note due to dated one day off from top date that he put in and bottom date that it was notarized on. Went and resigned and called to tell seller. Note buyer was threatening me saying he was going to terminate the deal if he did not get those docs by the 31st of May (when he requested the redo on May 24th just before holiday weekend). The title company resent all docs overnight on May 29th, and finally note buyer E-mailed that he got the docs and the deal was still on.
Long post....but it's been an even longer 6 - 7 months working on this property.
Note buyer is Osemwota Omoigui (Dr. Sota), and I will never work with him again due to I feel he was not up front and honest about what terms he was demanding in the beginning and he constantly demanded things that were not in my control or my responsibility. Example being he wanted PMI on private note, wanted the HUD1 statement weeks before close, wanted me to send and fill out paperwork that is done though the title and insurance companies etc etc.
Hope this was a good use of my time and yours in posting this. This is only my second property and been investing for less than a year.
You want to go with a company that you know and trust, not someone who is just 2-3 people and doesn't have a presense in the market. Larger companies are known by banks and get better interest rates, anyway.
Sorry to hear that you had so much trouble. It happens when dealing with new investors. I keep in contact with many experienced investors and note companies so that my clients do not have to go through the hassle that you did. It doesn't mean that we don't come across a situation sometimes but, at least it is settled before 6-7 months.
Thank you for telling us your story and informing us.