Athen Apaquette

Success story:   What to do when you pay your mortgage to a private party and when you go to pay them off they demand $20,000 more than you owe?

This happened over the last week.

My client bought a property (9 units) from a man who was the seller and was willing to finance the property.  That’s usually good news.  The rate was a little high, 7% in 2006, but somewhat fair.

The realtor who represented the seller arranged the paperwork, and the escrow was owned by the realty company.  There was no outside lender and no due diligence performed since the seller was financing the property.   No appraisal, no inspection, no proper loan or condition disclosures of problems with the property (such as possible environmental risks due to a laundry next door).

Now that we were trying to refinance, the seller claimed that the amount owed was $318,000, when in actuality is was $295,900.  The seller had an attorney, where he lives in OR, maintain the accounting but that attorney had been fired and had given no records to the seller.   Seller now had his CPA trying to help…

My client said can they do that?  They are trying to steal from me, what can I do?   She was near tears every other day for about 2 weeks…

So I created 4 amortization tables for the seller, through his CPA, to show him where the miscalculation occurred, and for the all possibilities: the 1st 4 years of the loan, the next 6 years after a modification of the rate, and keeping the same payment, which meant extra principal reduction, and then a 4th amortization table trying to reverse engineer the amount the seller was coming up with.

We finally, after a lot of back and forth and a little bit of subtle threat to remind them or maybe inform them that that the burden of proof of documentation lies with the lender (seller), not my client (the borrower), we got them down to $298,000.   And no, I don’t get a cut of the savings. 😉    That’s part of what I do: do what it takes for the benefit of my client.   Or as she said:   Stop the madness!

Now my client can refinance get rid of the difficult, long-distance private party lender and get that cash out to reinvest for more cash flow.   And now correct accounting by a reputable lender will put her mind at ease and her financial records straight.