Las Vegas, NV, January 27, 2011 --(PR.com
)-- Wheatfield Homes, an owner of rental houses and condos, announces an expansion of its business in Las Vegas.
The company is offering to purchase houses that are “underwater.” (Underwater houses have a mortgage loan that exceeds the value of the house. It is estimated that approximately 70% to 80% of the houses in the greater Las Vegas area are underwater.)
Wheatfield plans to use a land contract, also known as a “contract for deed” to make the purchases. Gary Grottke, Manager of Wheatfield Homes, stated that “Using a land contract will allow the seller to leave their mortgage loan in place – it will not have to be repaid at closing!”
After the sale, Wheatfield Homes will then work to get the seller released (freed) from their loan, and to get Wheatfield a new loan based upon the current value of the house.
What will Wheatfield pay for houses that are underwater?
“Obviously, there is no current value to the house as the mortgage is still in place, but we are prepared to offer the seller $100 cash at closing,” stated Hollie Bourne, Assistant Manager for Wheatfield Homes.
What will the seller pay to Wheatfield?
Bourne stated that the seller will pay nothing to Wheatfield related to the transaction. “We will pay all costs related to the transaction including all closing and escrow costs. The seller will have to pay their own attorney’s fee, that is all.”
Grottke also said that Wheatfield Homes will handle all future dealings with the lender, and that his sellers will give the company a limited power of attorney, so the company has the authority to negotiate with the lender on their behalf.
Contracts for Deed have been used in Nevada for years, but have not been used extensively in recent years. Under this structure, the seller keeps their mortgage and is still liable on the loan. The seller also retains legal title to the house (Grottke confirms this, but says the title will be held by the escrow agent). The buyer – Wheatfield Homes - gets possession of the house and is responsible for real estate taxes, association dues, utilities, insurance and maintenance costs, but not for the mortgage loan (again seller is still liable for that).
Given that neither the seller nor the company will be paying the mortgage loan payments, how does the seller ever get off the mortgage loan?
After entering into the Contract for Deed, Wheatfield plans to offer the lender a new loan in exchange for a release for the sellers. The amount of the new loan would be at an amount equal to what the lender would get anyway on a foreclosure and sale.
“The only way that Wheatfield can get legal title to the house is for us to get the seller a full and complete release from any liability. If we are successful, we get the house with a lower loan amount, and the seller walks away free and clear. The lender gets a new loan that we intend to keep current,” said Grottke.
Grottke and Bourne are not overly optimistic that lenders will respond favorably right away, but he hopes that over time they will see that Wheatfield is offering them the chance for a quick resolution that will save them considerable time and money, and result in them getting the same asset value. Grottke notes that every time a lender accepts his offer, it will prevent a foreclosure and another house from having to be listed for sale.
Bourne also stated that Wheatfield’s offer may be attractive to lenders with documentation problems.
When asked about what if the lender will not cooperate, and still forecloses?
Grottke says that the seller has that risk today anyway, but he quickly adds that his company is going to absorb the first $10,000 in costs to defend and pay any deficiency judgment against the seller. So the seller’s worst case is still $10,000 better. “Plus we will deal with the lender headaches,” notes Grottke.
Wheatfield Homes was formed in Illinois in 2001. The company has owned and rented residences in Las Vegas since 2005. The company’s phone number and website for this new venture are 1-888-968-1688 and www.webuyoncontract.com.