Loan Acceleration Default Calculations Advice

16 Replies

My company purchased a first lien home equity nonperforming note in Texas years back. It took us six months (should have only taken 30 days) to receive the paperwork from the financial institution we purchased the note from. Once we received everything, we tried to get a deed in lieu of foreclosure from the mortgagee without luck. Then we sought out legal counsel and were told the note was worthless. Fast forward seven years, we found out what we were told was incorrect and the attorney did not know what they were talking about.

We are now sending a letter of default and acceleration, but we need to figure out how much the payee owes including penalty and interest. Is there a program or spreadsheet out there I could use? We do not purchase a lot of NPN's, and this is currently the only one we have. So, we are not wanting to spend a lot of money of something sophisticated just something simple and quick to get the job done. We have still sent letters periodically and we are going to try to get a deed in lieu one more time before we start foreclosure proceedings, but I need to have these figures.

Any suggestions? Your assistance is greatly appreciated.

Originally posted by @Shawn C. :

My company purchased a first lien home equity nonperforming note in Texas years back. It took us six months (should have only taken 30 days) to receive the paperwork from the financial institution we purchased the note from. Once we received everything, we tried to get a deed in lieu of foreclosure from the mortgagee without luck. Then we sought out legal counsel and were told the note was worthless. Fast forward seven years, we found out what we were told was incorrect and the attorney did not know what they were talking about.

We are now sending a letter of default and acceleration, but we need to figure out how much the payee owes including penalty and interest. Is there a program or spreadsheet out there I could use? We do not purchase a lot of NPN's, and this is currently the only one we have. So, we are not wanting to spend a lot of money of something sophisticated just something simple and quick to get the job done. We have still sent letters periodically and we are going to try to get a deed in lieu one more time before we start foreclosure proceedings, but I need to have these figures.

Any suggestions? Your assistance is greatly appreciated.

You have to know how much the loan was for, the interest rate, the late fee percentage, property taxes if applicable, homeowners insurance if applicable, HOA fees if applicable, any other fees or liens if applicable, when the last payment was made, make sure it's a "home equity nonperforming note" and not a "home equity line of credit nonperforming note" and with something like Zillow's mortgage calculator you can figure out the mortgage payments and payoff amount but you must still include late fees, etc

The attorney doing the foreclosure should be able to calculate that for you.



Originally posted by @Jerel Ehlert :

@Mike M. Hahahahaahahahaha.  Don't ask the attorney to do math.  Ask an accountant.  That's *why* we went into the law. 

Pay the accountant a few bucks and get it right.

 We do math, don't hire Jerel for this. Every deal gets a spreadsheet with formulas, compounding, etc. Causes a little bit of brain damage, but worth the $350/hour.

Originally posted by @Ronald Rohde :
Originally posted by @Jerel Ehlert:

@Mike M. Hahahahaahahahaha.  Don't ask the attorney to do math.  Ask an accountant.  That's *why* we went into the law. 

Pay the accountant a few bucks and get it right.

 We do math, don't hire Jerel for this. Every deal gets a spreadsheet with formulas, compounding, etc. Causes a little bit of brain damage, but worth the $350/hour.

 The added bonus of using an attorney for this is that an attorney will know what you can legally include in the foreclosure costs. It seems to me that waiting some seven years to foreclose will present special problems. The debtor will most likely sue.

@Mike M. After the first attorney gave me incorrect information I want to make sure I double check everything if not triple check everything here on out. The interest rate is 11.890% and the penalty interest rate of an additional 5.0% kicks in after 10 days or $10.00 whichever is greater. The loan was taken out on 1/31/2000 and no payment has ever been made to date. this note has been sold many times over. 

@Mike M. We are going to be using an attorney. The mortgagee doesn't want the property but they don't want to sign a deed in lieu either. We are still trying to negotiate a deed in lieu and that's another reason for the figures. Even our attorney is puzzled by their thinking and reasoning. 

Originally posted by @Shawn C. :

@Mike M. We are going to be using an attorney. The mortgagee doesn't want the property but they don't want to sign a deed in lieu either. We are still trying to negotiate a deed in lieu and that's another reason for the figures. Even our attorney is puzzled by their thinking and reasoning. 

They probably know and have been advised that a "Deed in Lieu" destroys their credit. Sign a stipulated agreement that you will not report the transaction to the credit bureaus.

They may also be aware that they have to pay taxes on forgiven debt.

I would give you 0% chance of collecting money on this one. 19 years without payment is a mind boggler. I'm sure there is case law but it likely won't be in your favor.

I would consult with @Ronald Rhode to see if doing a Quiet Title and/or a Quit Claim Deed from the debtor will resolve the issue. It would be well worth the money and he is tuned into what you are trying to accomplish. You would wind up with the property but presumably without the expense and time of a lawsuit.


If I can get them to sign a deed in lieu even after all the city liens and years of back taxes my company still stands to make a great profit off of this note. The reason we are making sure we have the figures correct is if we have to foreclose but mowe hope to use the figures as a strong point in negotiating a deed in lieu to avoid the foreclosure. 

Originally posted by @Ronald Rohde :
Originally posted by @Wayne Brooks:

Yeah, no payments on a 19 year old loan....I’m afraid you’re about to find out why this loan has been sold so many times.

 I would not take that bet either!

I bought a property last year in WA  state and the lender failed to foreclose for 10 years.. and the lender just mailed the owner their deed I had never heard of that before I guess there is some statue of limitations as to when a mortgage or deed of trust needs to start an action once default has occurred.  I got fresh title insurance on it and then flipped it.. to a rehabber.. so I know it can happen I wonder if the laws in TExas are the same ?  also don't think this mortgagee is in risk of credit being blemished with a DIL  probably not reporting anymore. 

 

Originally posted by @Jay Hinrichs :
Originally posted by @Ronald Rohde:
Originally posted by @Wayne Brooks:

Yeah, no payments on a 19 year old loan....I’m afraid you’re about to find out why this loan has been sold so many times.

 I would not take that bet either!

I bought a property last year in WA  state and the lender failed to foreclose for 10 years.. and the lender just mailed the owner their deed I had never heard of that before I guess there is some statue of limitations as to when a mortgage or deed of trust needs to start an action once default has occurred.  I got fresh title insurance on it and then flipped it.. to a rehabber.. so I know it can happen I wonder if the laws in TExas are the same ?  also don't think this mortgagee is in risk of credit being blemished with a DIL  probably not reporting anymore. 

 

@Jay Hinrichs That intrigues me. Do you happen to know who the lender was? I'm thinking that perhaps the loan was sold and resold and resold again and somewhere along the line the paperwork got lost, or was declared invalid in court, so the bank couldn't prove they had the right to foreclose. The loan may have originated with Washington Mutual or Countrywide and been part of the MERS controversy.

Anyway, good job for spotting an opportunity.

 

Originally posted by @Mike M. :
Originally posted by @Jay Hinrichs:
Originally posted by @Ronald Rohde:
Originally posted by @Wayne Brooks:

Yeah, no payments on a 19 year old loan....I’m afraid you’re about to find out why this loan has been sold so many times.

 I would not take that bet either!

I bought a property last year in WA  state and the lender failed to foreclose for 10 years.. and the lender just mailed the owner their deed I had never heard of that before I guess there is some statue of limitations as to when a mortgage or deed of trust needs to start an action once default has occurred.  I got fresh title insurance on it and then flipped it.. to a rehabber.. so I know it can happen I wonder if the laws in TExas are the same ?  also don't think this mortgagee is in risk of credit being blemished with a DIL  probably not reporting anymore. 

 

@Jay Hinrichs That intrigues me. Do you happen to know who the lender was? I'm thinking that perhaps the loan was sold and resold and resold again and somewhere along the line the paperwork got lost, or was declared invalid in court, so the bank couldn't prove they had the right to foreclose. The loan may have originated with Washington Mutual or Countrywide and been part of the MERS controversy.

Anyway, good job for spotting an opportunity.

 

YOu know I did not dive into it I just asked my Senior escrow officer at WFG if they would insure .. and I got a yes and went forward.. certainly could have been a mers .. but something tells me there might have been a statue of limitations.

 

Yeah, the MERS thing never really was an Actual issue, just a bunch of foreclosure defense attorneys Tried to make an issue out of it.  Here anyway, there are two SOLS.....1) is 5 years from the actual Acceleration by the lender 2) 5 years past the original term of the mtg, regardless of any acceleration issues.

Originally posted by @Wayne Brooks :

Yeah, the MERS thing never really was an Actual issue, just a bunch of foreclosure defense attorneys Tried to make an issue out of it.  Here anyway, there are two SOLS.....1) is 5 years from the actual Acceleration by the lender 2) 5 years past the original term of the mtg, regardless of any acceleration issues.

Wayne I believe that was the case in this one they started a foreclosure and never finished it so the statue ran.. I know having been a bene doing foreclosures there are time lines you have to follow.. or you have to start all over again.. 

 

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