First Capital Trust Deeds provided a foreclosure auction loan that allowed the buyer to cash-out 83% of the winning bid within six days.
A frequent foreclosure auction real estate buyer was seeking to recapture the majority of funds that had just been used to buy this property in Northern California in order to go back to the auction the next week and buy another home to flip.
This was an ideal cash recapture and money recycling type of loan. You can read about it in this article.
We considered this a two-part solution that involved the lender and the title company that will guarantee title with just a trustee’s sale receipt, which speeds up the process by about two weeks.
The title company delivered a preliminary title report and commitment to insure title for both the lender and borrower/owner. Nearly every title company we work with requires a Trustee’s Deed to be recorded before issuing a title commitment. In this situation, however, the title company we used issued a title commitment with just a receipt from the trustee’s sale (foreclosure auction).
The lender, which had previously worked out this type of arrangement with the title company on behalf of another borrower, ordered a quick drive-by appraisal that was delivered within 24-hours and sent loan docs out to be signed.
There were some big win-win accolades here. First, the borrower pulled $154,000, or 83% of auction purchase price, out within 6 days of making the purchase on this cosmetic fixer that most likely will be resold within 3-4 months. This allowed the borrower to go back to the auction to find another property to repeat the process all over again.
Second, the title company was able to close their first of what should be several transactions with this borrower. Call it breaking bread and establishing a healthy working relationship.
Third, the lender, a Southern California private mortgage investment fund, was able to issue another loan right before month-end. And since the client will be using the cash recapture funds to go right back to the auction next week, the fund is likely to close another loan within the next 10 days following this same blueprint for success.
Cash-Out Foreclosure Auction Loan Terms:
- $154,000 Loan Amount (83% of auction purchase price)
- 12-Month Term
- No Prepayment Penalty