Specialist · Tucson, AZ · Member since 2009 · 108 posts · 24 votes
I obviously like preforeclosures with 2 loans, to be able to short the second one and create more equity, but havent found a solid method to find homes that have 2 loans. Right now I am just relying on luck from people bringing me their pre-foreclosures, that some have 2 loans.
Does anyone have a good method to find out how many loans are on a house?
It might be that you want to explain your business model better. You are actively looking for potential short sale properties with 2 loans. That I understand, but your supposition that this will allow higher equity is not necessarily the case.
Most, if not all, lenders will use the BPO/appraisal to set the lowest price they are willing to accept. If the property is worth $200K FMV per the BPO and the 1st is owed $340K, then how is having a 2nd mortgage in this scenario allowing you to produce more equity?
If you are shorting the 2nd, but taking the 1st over as a Sub-2, it is much more understandable. In this scenario, your question will work very well and allow you to receive a higher equity than through a normal short sale, depending on the amount still owed to the 1st mortgage.
If you could provide a more detailed explanation of your reasons for wanting properties with 2 mortgages, it will help in getting your question answered.
It might be that you want to explain your business model better. You are actively looking for potential short sale properties with 2 loans. That I understand, but your supposition that this will allow higher equity is not necessarily the case.
Most, if not all, lenders will use the BPO/appraisal to set the lowest price they are willing to accept. If the property is worth $200K FMV per the BPO and the 1st is owed $340K, then how is having a 2nd mortgage in this scenario allowing you to produce more equity?
If you are shorting the 2nd, but taking the 1st over as a Sub-2, it is much more understandable. In this scenario, your question will work very well and allow you to receive a higher equity than through a normal short sale, depending on the amount still owed to the 1st mortgage.
If you could provide a more detailed explanation of your reasons for wanting properties with 2 mortgages, it will help in getting your question answered.
ha sorry about that guys, sure let me explain. Where I live, Corpus Christi, we dont have that many underwater loans, even if the homes were purchased just a few years ago, they still usually have some small amount of equity in them.
Ill give a general example of what Im looking for
House is worth 100k
First loan is 80 k
Second loan is 20k
Homeowner is 4 months behind (here in TX, 4mos, can be foreclosed upon)
Get thirdparty authorization, negotiate w 2nd loan, advise that home is about to be foreclosed and they wiped. Pay minimal amount for 2nd, 2k etc, then yes, catch first loan up, flip, sub 2, lease option whatever.
But again, I have not found an efficient way to find homes that have 2 loans.
Any advice?
You should be able to find the property owners that have a foreclosure filed in any county. By either going to the clerk of courts or going online if clerk puts them up. Then cross reference the property owner and how many mortgages have been filled. Once you find two or more locate the property. And get into touch with the property owner.
Crosswind. Thanks, thats pretty much what I do, but it takes a long time to look up each individual home up and then go through the liens. I was wondering if there is a more efficient, less time consuming way.
Scott - When you say notice of default, do you mean they give you info on homeowners as soon as they miss one payment? Or are they notice that they are about to foreclose, i.e. the last month, just like the list at the courthouse?
What I would do in my county is this. After I get a lead on any mortgage that is foreclosing, I would then go to the "recorder of deeds" (it's online for me) and search on that property for all recorded docs to see if any other mortgages remain that lack a satisfaction or release of lien; I search for all docs because that gives me the satisfactin pieces and lien releases too. Lo and behold, there you have your property with 2 (or more) loans, and one is in foreclosure without a doubt.
Of course, the borrower might be current on the first, in which case it won't fit your target (first probably won't short if it's current). But when I do these searches for sheriff sale properties, I see that they are usually delinquent on all loans; given that, I'd say this should work for you.
ha, no problem. About your method, I have attempted it before on our county clerks site, which is kind of a tricky site and to view the documents you have to pay$5 a piece.
So for example, I put in the legal description for a property I know has 2 different liens, one I just wholesaled actually.
That brings up a window with 9 different documents, 4 are listed as equity security instruments w 4 different companies, 3 are affidavits, 1 is a homestead and 1 is an agreement. How do I know which is a lien, whether it is current etc?
My county wants you to pay for e-certified docs too; I have a means around that which is a little bit techie, so I can't disclose what I do.
Your question is part of understanding how title searches work in your area. I am not from your area, and I am not an attorney or title abstracter; my reply just comes from what I see from researching properties in depth for my sheriff sale purchases (more like avoiding the bad ones).
The equity security instruments sound like they fit the category of lien.
Homestead is usually used to get lowered property taxes, or to protect a home when filing bankruptcy.
The "agreement" could be an assignment, or a loan modification, or a subordination agreement. Or even something else.
Don't know why an affidavit would be there off the top of my head.
Now you said you know it only had 2 liens, yet you said you found 4 companies on 4 equity instruments. Sounds like you need to find out how to identify satisfaction pieces and lien releases, because 2 of those 4 probably had one or the other in order for there to be only 2 liens left to deal with. Make sense?
One other thing. Some counties have totally free online searches of county records when you perform them from the public library. Check that out to save a few bucks.
Scott - When you say notice of default, do you mean they give you info on homeowners as soon as they miss one payment? Or are they notice that they are about to foreclose, i.e. the last month, just like the list at the courthouse?
The latter. Title companies usually have the ability to data mine county records and pull new notices.
Also, you could try having the title company first pulling all homeowners in your geographic area of choice who purchased a home in 2006-2007, who have at least two mortgages, and have an out-of-state mailing address. Why out of state? Becuase these are usuallu investment properties or second homes which are the first to be let go when sellers become distressed.
You could also try the 30,60,90 days reports from list providers but I have found this this to be expensive. However, in your case, since property values are still strong when compared to other markets, you might try this approach.
Also, network with REALTORS. Generally they are the first ones to be contacted when someone is selling. As long as they get a comission and they believe you can perform, you can get a great many leads from them.
hmmm, interesting, thanks for the input. I havent used title companies like this before, a good idea. Just to clarify, they will be giving me the same info I would get if I were to go to the court house myself right, but it is going to save me a good amount of time. How much do they charge to do something like this?
I have been contemplating the 30 60 90, think I will probably try one out in the near future. I like to do my own door knocking instead of mailings, so see what kind of response I get from them
Hi sam - just curious to know how well door-knocking has worked for you. I'm guessing pretty well since you stated you prefer that over mailers. also, why do you prefer door-knocking?
You can search tax records for people that have two loans and check if they are in default you can also use www.listsource.com they allow you to sort this info.
Well Dave, to be totally honest, I am pretty new at rei over all. I have never done a full on thousand letter mass mailing or yellowletters or anything like that. I mail out my own preforeclosure letters and will get a few calls from that. Reason I like door knocking is that apparently I come off as a nice, respectable, trust-worthy young guy to most people lol and so I am able to make a personal connection with them.
Not to mention we live in the U.S.A., dont get me wrong I love America, I have sworn to serve and protect it, but not everyone here is, how do you say...... smart? Ha and so lot of people that get a letter, no matter how well it explains the process, just will not understand it, think its a scam, throw it away or not read it because it is cutting into their American Idol time.
Then again, door knocking can get pretty expensive when you are driving all over town, half the people dont answer their door, the other half is at work and the third half thinks you are trying to do a home invasion lol.