Deal or Dud? Discovering Red Flags in Due Diligence

Initial Assessment: The deal involves a property in Toledo, Ohio, with a $106,000 UPB and a sales price of $110,000. The interest rate is 8.9%, with P&I payments of $845.71 a month. Sounds good, right?

The Red Flags: Concerns arise when the previous value was $56,000, raising questions about the escalated sales price. Plus, current market rent is around $1,000 a month.

Making an Offer: I dove in with an offer at $40,000, aiming for a sweet yield. But is it too good to be true?

Collateral File Deep Dive: We explore the collateral file, including underwriting, property insurance, closing documents, and servicing history. Time to put on our detective hats!

BPO Blues: The exterior BPO comes in at around $60,000, which is lower than expected. Could this be a sign of trouble?

Servicing History Shenanigans: The servicing history reveals a lack of consistent payments and late charges. Houston, we have a problem!

The Seller Confession: The seller admits the note is not performing and apologizes for the misrepresentation. Honesty is the best policy... eventually.

Foreclosure Fears: With the borrower making zero payments, foreclosure looms. Can we turn this ship around, or is it destined to sink?

Cash for Keys Conundrum: Considering offering cash for keys to expedite the process and avoid costly foreclosure. A little sugar goes a long way!

The Verdict: Based on the BPO and payment history, this deal is currently a dud. But with some savvy negotiation and a bit of luck, we might just salvage it.