Location: Alameda County, CA
Property type: Single Family Residence
Occupancy: Owner occupied
Property value: $1,000,000
Loan amount: $125,000
Challenge: Client came to Exception Lending via referral from another mortgage professional who knew Exception Lending could solve difficult financing scenarios, and also had access to private money loans. The client owned her home in Berkeley, CA with no mortgage (free and clear). However, she had stopped paying property taxes during Covid, and had not resumed. Unpaid property taxes had accumulated on the property, and the ongoing delinquent status had led the county to mark the property for a tax lien sale, to cure the default. When we first made contact with the client, there were less than 30 days until the county deadline to cure the property tax default, or face a tax lien sale.
Private money loans cannot be used for consumer purpose except when purchasing a new primary residence linked to the sale of an existing primary residence, so this solution was not an option. Reverse mortgage loans can be very fee-heavy upfront, and require mortgage insurance and an FHA compliant appraisal, which often requires termite damage remediation and other obstacles to quick funding.
Solution: Instead of an expensive private money loan, or a reverse mortgage which can take 30-45 days to fund, we were able to use the client's social security and wages to qualify for a standard conventional loan, without mortgage insurance. The rate was selected with a lender credit to cover most closing costs, rather than paying expensive points upfront. The loan amount was increased to cover not only unpaid property taxes, but also a large amount of personal credit card debt which was accruing expensive interest monthly. We pulled enough cash out to pay off all outstanding debt, and provide a reserve fund for the client. Additionally, we set up an impound account for the client's property taxes and insurance payments, to make sure these expenses were addressed monthly instead of allowed to accrue over time. Exception Lending knew how critical the impending deadline was for the client, and successfully closed the full-documentation refinance, including a full appraisal, in 18 days.
Long term, this client will have the option to refinance, convert the existing mortgage to a reverse mortgage, or sell and downsize into a more modestly priced home.
Interested in exploring similar options? Contact us here.