I bumped into my old neighbor who have a lot of businesses. I thought it’s doing good.
He is one of the right hand person of a politician. I learned that when that politician lost in the election, all his business flunked.
He is one of the right hand person of a politician. I learned that when that politician lost in the election, all his business flunked.
He knew that I’m into real estate and asked me this question "my condominium in the Fort Global City is facing foreclosure from a developer. The property is still pre-selling, and I really don’t have the money to pay for the arrears (unpaid amortization). Can you help me?”
For a moment I hesitated because I don’t like this man. He is known to be the person giving money every election for his politician boss. But Luke 6:33 says, “And if you do good to those who do good to you, what benefit is that to you? For even sinners do the same.”
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| Photo credit: https://pixabay.com |
Here are the tips I told him:
1. Don’t ignore bank/developers/lenders letter. Pay attention to them. Call them or reply to their letters. This will show your intention of facing your obligation but explain that you’re in a tight situation now.
2. Ask for leniency. You can create a letter addressed to the Manager or Head of Credit to ask to delay payments for a short period of time. Ask for 2-3 months.
3. Ask for interest payment only. Give specific time when you’re going to pay the principal.
4. Ask to change your payment scheme. If possible, extend your term longer to have lower amortization. And whenever you have extra cash to pay, ask the bank to allow you to pay the principal to save from future interest.
5. Ask for a refinancing plan. You can transfer the loan to other banks. Sometimes this can be favorable for you since the other bank might appraise your property higher and you can leverage on this.
6. If you owe the developer, if you already paid two years amortization, by law you are entitled to get 50 percent of your payment. But if your lender is the bank, no single penny will be returned to you.
7. Sell it really low — lower than the market price. The allowance that the bank/lender gives you, also gives you time to sell your property at a profitable price.
8. Sell it again. Let someone assume your mortgages. Sell it even though you lose some money. At least you get some rather than nothing. There are creative and legal ways to do it. In the end, I helped our neighbor sell his property at a very very low price. He already paid Php 800,000 to the developer but when we sold it he only got 600,000. He lost 200,000. A few days more, he will have lost everything with foreclosure. He was able to use that money to build his business again.
When you are not able to pay the amortization in the next few months, act on it. Don’t wait for credit letters to come.
Sometimes we have to accept that we fail in doing specific real estate investment, especially buying preselling properties. When you are able to accept your failure, you will be able to accept the highest possible amount you can get out of your property. Then you can always move on to the next property suitable and profitable for you.
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