As I've mentioned before, I'm pretty well experienced in buying here at our sheriffs auction (WI is a judicial state) and haven't had an issue yet in buying quite a few of them and I've got a guy who runs the title searches for me on the few that I'm really interested in, always my last step is his "stamp of approval". I know he's quite cautious though and there's one going through tomorrow worth going after, but its a $350k opening bid, so not the kind of $$ I feel like losing, or even the 10% I'd have to leave with them tomorrow if I got it. Its got a great upside though, so even some possible risk is worth taking here.
The soon to be former owner was involved in a fraud case with his former employer and got a $500k judgement on him, judgement date of 2/18/2011. This case was also in a different county than the auction (and of course the property)
Then, Citi filed on 8/01/2102 and it has the lis pendens as filed on 8/30/12 and my title guy says it was filed in BOTH counties, the one where judgement was as well BUT I also see in the court record that an attorney for the plaintiff in that fraud suit filed something involving Citi's foreclosure suit on 8/29/12-one day BEFORE lis pendens was filed-that's what has me wondering here.
There's another case from same plaintiff too, I'm going to look at that now but wanted to get this up right away, as the auction is tomorrow, probably going through around 11am CST. So, I'm wondering if any of our well versed people have any conclusions as to what kind of trouble I might have, if any at all??? Thanks!
OK, the second case I was looking at was a Transcript of Judgment filed here in Milwaukee County, which is the county where this property is located, the civil suit against him for the fraud was in Rock County. Transcript was filed on 3/4/11 and docketed on 3/8/11 but then it also lists two "judicial transfers" on 8/3/13 and 8/2/14. Citi filed on 8/1/12 and lis pendens was filed on 8/30/12 and was filed in both counties.
Also, I see that the plaintiff in the fraud civil suit filed a lien on this condo on 11/24/2009.
So, I guess my main question is if Citi filed lis pendens after all of this but named this plaintiff as a defendant in the foreclosure suit like I always see them do for any other parties like a 2nd mortgage and it was filed in both counties, so they must've been properly notified, why wouldn't this get dropped? Is my title guy too nervous??
OK, I'm about out of time but I think I've got some answers as my brother is at the law firm now getting info now, hopefully. I'll have to find somewhere to get the exact ins and outs of the law on this subject, I've run into this before where there's a question like this and I know other buyers do too and no one buys a lot of these if there's any questions about a defendant being served or having any claim on the property.
Generally the "first in time, first in line" deals with when the Mortgage (lien) was filed, Not when the LP was filed. Otherwise a first mortgage would have no value if a later lien was filed, prior to an LP on that mortgage being filed. The judgment creditor, from another county, has to file a "foreign judgment" in the county where the property is located to have a lien, which it sounds they did, in order for it to attach. But being filed After the mortgage was filed would put them behind the mortgage, and only entitled to any surplus. In regards to the 2009 lien, when was the mortgage being foreclosed on recorded?
I agree with @Wayne Brooks . Best for you to understand how lien priorities work in your state, because that stuff does vary.
BTW Wayne you did explain that very concisely, especially the foreign judgment. I've seen foreign judgments come from other states as well; that just establishes pecking order for the overage (if any). Of course, the holder of that judgment could attend the auction and bid, usually to get the overage to the point where they get paid something.
Thanks @Wayne Brooks the mortgage (first) that's foreclosing was recorded with county on 7/31/08. The judgement date was 2/18/11, but that was in the other county. it wa docketed in this county on 3/8/11 but they did file a lien on the property in this county back on 11/24/09. Obviously, all of that happened after the mortgage was recorded, so then from what you're saying they should be in line after the first mortgage then I take it?
I do get your logic that any mortgage would be rendered worthless by any future judgement if it worked that way, that makes sense!
Yep, this should be obvious to your title person.
Yes, that has me puzzled too. He sent all of the docs he got from his online search and its obviously all the info from whatever service he uses, they aren't docs anyone could get themselves online without being a subscriber to whatever he subscribes to, but the conclusion seems obvious to me now as well.
Why would any bank write anyone a mortgage then? Maybe a retired 80 year old nun is a good risk for not committing a fraud and being sued for it, but what if she forgets to renew her car insurance and runs someone over with her car?? She'd end up with a monster judgement for that too and that mortgage would thus be worthless as well!
I'll have to do some more research on the exact WI laws, but my brother is at the auction now waiting for that one to come up. Milwaukee County has a good sized number going through each week, although its certainly down from a few years ago.
Robert the judgment is just an order against that person and then they file to attach to any assets in the hopes of the creditor getting paid.
The original judgment creditor can still be involved or they could have taken a tax write off loss after selling the judgment for cheap and transferring rights to another creditor.
Most liens are wiped out at the foreclosure auction. Make sure this is a foreclosure auction and not a regular one. Make sure you are bidding on the first.
I think the issue here is the title guy doesn't want to insure this mess of a property with all of the junk attached to it.
The judgment doesn't go away on the person the creditor just loses the foreclosed property as an asset to attach to anymore.
No legal advice.
Also, that would explain what the plaintiff (from fraud judgement) was doing in court right after foreclosure case was filed and a day before the lis pendens was even filed, they wanted to get in line in front of the 2nd mortgage for any surplus. I didn't see a judgement amount on the Citi foreclosure but it was originally a $500k mortgage 5 years ago and opening bid was dropped to $350k, so I'd think the chances of any surplus are small or nonexistent. Condo is worth conservatively $450k, so I can't see it going up too much from the opening bid either.
@Joel Owens thanks! Yes, WI is a judicial state and this is the county sheriff's auction. I think you're right on with my title guy, no one wants to be sued and these days people get sued for everything!
Well, after all of this and a lot more, sale was cancelled at last minute, which at least here and I'd guess everywhere else as well, is somewhat common. Usually each week there's at least a few and sometimes a bunch that they announce right before the sale begins had been cancelled and others which had been postponed. This one did have a short sale going as well (listed at substantially higher price) which they recently accepted an offer on, but I've seen many go through the auction with accepted offers on their short sale listings as obviously the soon to be former owner can accept as many offers as he/she wants, but if the bank isn't interested it doesn't mean a thing and the sale goes through. Apparently they liked this one, although I wouldn't be shocked if it pops up again in a couple of months, that's happened many times as well. Thanks for your help guys!
You mentioned a second mtg. Again, the second will be ahead of the judgment lien, assuming the 2nd was "first on time". Also, with a 1st, a 2nd, and a judgment, the odds of getting a short sale negotiated out to make everybody happy is slim. Look for this one to come around again.
Actually that's another angle I hadn't thought of for some reason but it certainly makes sense! I'd just been thinking on terms of your "normal" short sale with one bank, but not knowing what the principal balances are on each but factoring in that this character just got whacked with the fraud case (which in the notes mentioned a $70k payment and $3k/month garnishment for restitution) plus attorney's bills and doubtful shot at decent employment, I really doubt he was paying down those balances much! Even if the short sale was at listing price, its got to be a fraction of the grand total then.
The second mortgage holder could have paid off the first, the first holder could have sold the note to anyone.
You could have a borrower who had two different judgments, a suit by the same plaintiff the older one settled, then another. Without looking at the case you won't know from filing dates.
Perhaps someone who commits fraud also lies, if they lied on a mortgage application and the judgment or case wasn't picked up on the credit report then the bank wouldn't know since they don't do criminal background checks.
Certain liens are not washed off by foreclosure, court orders, back child support, taxes and levies so, as Steve pointed out, in your business, you should understand lien priority an other methods to satisfy a lien holder prior to a sale. At the level you're dealing at, hundreds of thousands, I'd suggest you break down and part with a couple (few) hundred for legal advice from an attorney, not a title guy or the internet. A local attorney who acts as Trustee or who has in the past will be your best source for an education in what can effect the sales and who's on first. :)
@Bill G. thanks and that's actually another conclusion I came to yesterday, that it would be smart without a doubt for the future to get an education directly from an attorney who practices directly in this field and preferably one who does it often! I have a real estate attorney who could deal with any eviction or landlord type proceeding, it is his specialty, but that's not the same area at all, even if they both deal with residential real estate, etc. So, I'm asking him for any referral he can think of, as well as checking myself as I already know obviously, which local firms do this work and how much they do.
I'd thought about this too because just this weekend I attended our local apartment association's annual "landlord boot camp" which is a great thing they hold each year and besides getting a huge binder full of all of the latest landlord/tenant law info, etc the boot camp is run by a great local landlord's attorney who's in court every week here actually doing many evictions and anything else a landlord might need to do in court and he's able to toss in literally hundreds of observations of things that here in this county, or even just a handful of judges in this county, they will do that you'd never think of much, even after memorizing the entire law book! For example, maybe there's a list of 6 items a landlord needs to do during an eviction and just with a handful of judges here, item #3 is more important than the other 5 combined, which anywhere else in the state isn't the case. Yet, if your case lands in one of these few judge's hands, you better make darn sure that item #3 is done to the letter and over-documented or they'll just toss the whole case! Sounds crazy at first, but this guy knows from experience its the truth. Interpolating that to this scenario, I can see where I want to learn not just the statutes, etc but how they're enforced in reality in court and that requires a practicing attorney in this specific field, exactly what you're saying as well!
Tough part is finding a firm or individual attorney eager to sell a single hour of his/her time to someone who's not going to be filing any foreclosure suits anytime soon, if ever. One way or another I'm sure someone will and out of the 20 or 25 firms I've seen handle a local case, many practice in other areas as well. A few are basically debt collection firms, but others aren't.
Yes I attended a lot of eviction hearings and did them with my tenants. You learn how that local county court works and what they want to see as mentioned.
The judges hear people blab their mouths off everyday constantly. The judges get frustrated and start getting in a bad mood. So if your case gets heard at the beginning of the day many judges are in a chipper mood.
If your case is heard end of the day it's best to let the tenant dig themselves a hole by constantly talking. The tenant is pissed because they have been there all day and will vent that on the judge by talking about a bunch of nonsense that has no basis on the hearing.
This is when a landlord can shine by only talking and answering in a brief way. The judge will see this as a breath of fresh air. It's great to have a bunch of documents but only give what the judge asks for. You might think there is much more data relative to the case but it doesn't matter if the judge gives you the landlord what you want right away.
The foreclosures on buying houses here in GA it has to be all cash. It is typical for a foreclosure notice to bluff by the second. Some second liens will "fake a foreclosure" hoping an idiot bids on the second and makes them close to whole. Sadly I have heard of investors actually buying these worthless seconds before wondering why the house was so cheap only to get burned badly on the deal. The second will have the attorney bid and then cancel if no bidders etc.
Also you get short sales stopping foreclosure at the last second, a loan mod agreement, a wrongful foreclosure that must be redone, or they file BK etc. at the last second to stop it ( usually a 13 is cheapest to file ).
There is usually only about 10% of the properties at auction worth bidding on and some of them do not make it to sales and are cancelled. So you have a lot of cash buyers fighting over the ones that do get bought. I am not seeing the margins to make it worth my time to buy at the steps. You need to find properties that not everyone knows about so you can buy low and make more profit on the deal. If growing your money and finding deals was easy everyone would be doing it.. : )
Robert, I wouldn't ask your RE attorney for a referral, first off, highly unlikely he would say go see Joe Green, that just isn't done professionally and that takes on liability issues. Referrals are made within in a firm, but I never heard of a good attorney suggesting another specific attorney, they might, at best toss out clues or tips.
You're also saying to him that I'm looking for someone that might be better than you! He can probably tell you everything you really need to know.
To find active attorneys dealing in foreclosures as a trustee, simply look at the security documents of past FCs, they are listed as trustee. You can look at newly filed mortgages and see who acts as trustee (notes that are sold may not have local trustees). In Mo. a trustee is not required to be an attorney, so I was often the trustee.
Being a trustee is not really a position that has a decision making process other than following legal requirements. Short sales, not purchases, loan modifications and workouts are not the job of a trustee, it's the note holder or other appointee who calls those shots.
So, placing emphasis on a trustee doing a lot of current business really isn't going to be any advantage to you and, most likely, they won't take you on as a client; 1. it can easily get into a conflict of interest counseling you as a buyer and being called upon to act as trustee.....and 2. They are busy. So, actually you'd be better off with someone who has been active in foreclosure work, probably better served not by trustees but by those defending borrowers as well as having acted as a past trustee. :)
@Joel Owens at least 90% or even 95% of them here each week going through have opening bids much higher than any investor would ever pay and of course are taken back by the plaintiffs and then we see them as REO's of course and I'd assume its probably much the same in most judicial foreclosure states, that's how its been here since I started going to the auction around 2004.
So, each week there's usually only a handful out of that originally long list worth looking at and then its over to the mls first for me, then if any still are standing it is time for the in person visit and of course you can't get inside legally unless its occupied and you're able to convince them to let you in, which of course is rare-most people aren't too excited when that time comes, but a few will! Of course, other characters are known for always somehow finding that one back door that's wide open and then they'll of course have to go inside and make sure everything's OK in there and do a quick inspection at the same time! I like not being a criminal so far in life, so I don't bother with break-ins! Its tough though, since up here pretty much everything has a basement and fixing a bad basement is EXPENSIVE and obviously its pretty much impossible to assess a basement's condition from outside! I've still seen some good ones here and there, but not what is was at times before.
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