Freehold Township New Jersey-Reinstatement
Lunar acquired all the beneficial rights to an end unit town home. This property was owned by a middle-aged couple who had their business collapse as a result of the poor economic conditions at the time. The borrowers were very cooperative and communicative. The borrowers explained that this was their last asset as they had lost everything else and they could try to bring the mortgage current and save their home. They were behind $74,000.00 in mortgage payments and they smartly hired an attorney who communicated with Lunar on a regular basis. About 60 days after acquisition their attorney called to explain that “the borrowers had come up to $54,000.00” and would Lunar be in a position to accept a “short” reinstatement of their mortgage and consider a loan modification to help the borrower get back on their feet. Running the numbers I accepted the short payoff and provided the borrowers with a 3% interest rate for the next 60 months to help them save their home.
Having paid $151,000.00 for the note I accepted the $54,000.00 as a short reinstatement and brought Lunar’s cost basis down to $97,000. Lunar than collected 3 monthly mortgage payments of $1600.00 each payment which further lowered the costs basis to $92,200. In the fourth month Lunar re-sold the note to buyer of re-performing notes for $124,000.00 for a net gain of $31,500.00. Equally important was that Lunar helped preserve the home for the borrower.