Case Study #4: Birmingham, MI
Property Details:
Square Foot: 3748, 1640-sqft fin. basement Year Built: 2000 Style: Colonial Beds/Baths: 3 beds, 4.2 baths Garage: 3-car detached Lot size: 65 x 130
Situation
The owner had a total outstanding debt of $1,200,000. The current market value (CMV) on the property was $1,050,000. The owner was not in default and had a 700 credit score. The owner did not want to move or damage her credit but wanted to improve the negative equity position.
Objective
Purchase the existing loan at a discount for cash, restructure the owner’s debt and provide long-term conventional financing for a take-out while not damaging the owner’s credit.
Solution
Negotiate and purchase the loan for $700,000 after which time, modify the owner’s debt from $1,200,000 down to $800,000. Assist in obtaining a take out lender at 80% LTV for a successful refinance 14 days after the note purchase.
Case Study #26: Seattle, WA
Property Details:
Square Foot: 6866, 2914-sqft fin basement Year Built: 2004 Style: Colonial Beds/Baths: 6 beds, 6 .2 baths Garage: 3-car detached Lot size: 96 x 250
Situation
The owner had a total outstanding debt of $2,700,000. The current market value (CMV) on the property was $2,300,000. The owner was not in default and had a 760 credit score. The owner was downsized and realized a substantial decrease in income. He did not want to move or damage his credit but could no longer sustain his current debt service on the loan and desired a lower loan balance and payment. In addition the owner owed $43,000 in outstanding property taxes.
Objective
Purchase the existing loan at a discount for cash, restructure the owner’s debt and provide long-term conventional financing for a take-out while not damaging the owner’s credit. Drastically lower his principal balance and debt service. Bring property taxes current.
Solution
The owner pays $43,000 to bring the taxes current. Negotiate and purchase the loan for $1,552,500 after which time, restructure the owner’s debt from $2,700,000 down to $1,725,000. Assist in obtaining a 30 year fixed take out loan at 5.5%. The owner realizes an overall 36% debt reduction.
Case Study #17: Tampa, FL
Property Details:
Square Foot: 5505 Year Built: 1947 Style: Contemporary Beds/Baths: 6 beds, 4 baths Garage: 2-car detached Lot size: 99 x 266
Situation
The owner had a total outstanding debt of $1,485,000. The current market value (CMV) on the property was $950,000. The owner was not in default and had a 700 credit score. The owner was professionally relocated and was unable to sell the house and decided to rent the property. Since current rents don’t support the debt service payment, the owner desired to reduce the principal and debt service so as to cash flow with the rental income. Additionally, the owner desired to position the property to sell to the tenant in 12 months.
Objective
Purchase the existing loan at a discount for cash, restructure the owner’s debt and provide long-term conventional financing for a take-out while not damaging the owner’s credit. Drastically lower his principal balance and debt service.
Solution
The current lender would only accept $680,000 for the note. Fund $580,000 and the owner contributes $100,000 in personal funds. Modify the debt from $1,485,000 down to $760,000. Assist in obtaining a take out lender at 80% LTV for a successful refinance 9 days after the note purchase for a total principle reduction of $725,000.
Case Study #12: Hartford, CT
Property Details:
Square Foot: 4620, 1791 sqft fin basement Year Built: 1964 Style: Colonial Beds/Baths: 5 beds, 2.2 baths Garage: 3-car attached Lot size: 1.64 acres
Situation
The owner had 3 liens with the same lender for a total outstanding debt of $920,000. The current market value (CMV) on the property was $850,000. The owner was 3 months in default and had a 600 credit score. The default was strategic because the owner didn’t believe he would recover his equity loss within the next 3 years. In addition, the owner has a free and clear rental property valued at $300,000.
Objective
Purchase the existing loan at a discount for cash, restructure the owner’s debt and provide long-term conventional financing for a take-out while not damaging the owner’s credit. Drastically lower his principal balance and debt service.
Solution
Negotiate and purchase all 3 liens for $573,000 after which time, restructure the owner’s debt from $920,000 down to $637,000. Institute a 1 year bridge loan at 12% interest only. Assist in repairing the owner’s credit and after 8 months, the owner secures a conventional takeout loan.
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