When is it too late to tie up a Pre Foreclosure deal?
Real Estate Broker · Colorado Springs, CO · Member since 2013 · 28 posts · 10 votes
When is it too late to tie up a Pre Foreclosure deal?
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Depends entirely on how fast you can close escrow on it, which relies heavily on having solid title/escrow companies and solid communication with the foreclosing lender. Once the foreclosing lender files an NOD, they can file a Notice of Trustee Sale after 90 days. Once an NOT is filed, they can foreclose once another 27 days goes by, so the clock is really ticking at that point. After an NOT is filed, you have to assume they'll be foreclosing on day 28. Therefore, hopefully you'll have started talks with the bank prior to one week left of that countdown. Seven days (which may really just be five business days) is pretty darn tight to start calling the lender to start arranging a payoff. It's doable, but it's probably going to feel pretty stressful.
48 Replies
- Real Estate Broker · Colorado Springs, CO · Member since 2013 · 28 posts · 10 votes9y
@Jay Hinrichs that makes sense and I've been following a few blogs that have the court cases and the rulings. I want to be able to give someone options which may include subject-to, but if the numbers don't work...they don't work. I plan on giving the potential seller a standard offering packet with 2-3 options with explanation of the pros and cons to each approach. Being upfront and honest is essential, but part of that would also be a notification asking for permission from the lending institution for that option to be viable. I just want subject-to as a tool in my toolkit. I know it still works in other markets, as well.
And BTW guys, also check- out this wholesaler in Florida's approach to list building. (See: youtube.com/watch?v=ExfunuFFRGE&t=266s&index=24&list=PLzP3bDBdnyxHZDRRlo36D_j76fD-pxZJg .) " How to Find Motivated Sellers for FREE in Real Estate Investing! " on YouTube. As I mentioned in the above linked article comments, most people are using the same type of yellow letters that got 5- 15%+ response rates, five or so years ago... while many are also chasing the same (auto generated) lists of 'leads,' and thereby getting perhaps a .5- 1.5% response rate now with direct mail, by following what the gurus only 'share' because those methods are by enlarge no longer converting well, for them. Or... because they have 25- 50 grand to 'beat - out the competition and still get sufficient results, while other means are doing much better. ;-)
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Scott T. when I did pre forclsoure buying in the PDX Metro area I would say we were number one... I had a team of 6 they worked in tandem. we door knocked EVERY NOD... in the tri metro area and Clark co WA (Vancouver).. again this is before the new laws were passed in OR CA and WA that made this activity illegal.. at least for sure in ORegon. you must be a LICENSED foreclosure consultant to talk to people in foreclosure.. you simply cannot direct mail them door knock them etc.. and if you do buy the home once your licensed.. then you must share the profits with them if you sell.. you MUST boot them out no sales lease back ( why I don't know makes no sense that was our biggest play of the day).. I know CA is not quite as strict but I do know yo don't want to be talking with those in distress or foreclosure until you have thoroughly gone through the laws with your attorney and understand what you can and cannot do. @John Payne
WE bought 2 to 8 a month this way for years its how I amassed my PDX rental portfolio in those days.. although I sold most of them with in the first 18 months.. and they are all long gone now.
So let me get this straight... the false 'government' is telling you that you can't knock on doors to help people, after a 'public' Notice of Default (post Dodd- Frankenstein?) because you're 'cutting- in on the banksters and BIG RE's, etc. action... under the usual guise of 'little man' corruption, while the fat elephants steal everyone, even blinder??? First of all, that is ILLEGAL. (Vs. 'UNLAWFUL...') and wouldn't even stand up in their own rigged courts of corruption, or there should be massive, repercussions...) And second, I'm not (nor to I intend to become) a RMLO, or 'agent' of the problem, for that reason. It amazes me that people are so afraid of the PTB that they won't call a cell phone, or talk to people about (100%) 'rigged' politics, or (mind controlling) religion, or why ALL 'media' is 'faux news' now, for e.g.
And while I appreciate all the 'warnings' here, noone tells me what I will or won't do, as I operate under my own 'code of ethics,' because the PTB and their false 'system,' HAVE NONE. It's a one- sided, about the 'law' (enforced at the barrel of a gun) system, and they keep "moving the goal posts..." SO either a 'line' is drawn in the metaphorical, sand? Or we continue to loose ALL of our rights, including the right to even own, exchange, will, or inherit property??
Case in point: https://en.wikipedia.org/wiki/Federal_lands (Notice the 'red' map...) They've been drawing their lines (around the population centers) for quite some time, now!
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Scott T. you also don't have to pay income tax's that's just what people do.. no law says you have to..
I am only pointing out that in our state you have to be a licensed foreclosure consultant to deal with anyone in default regardless of how you found it.. in CA there are other rules you should check them out.. has to do with all the fraudsters who stole equity back in the beginning of the crisis.. nothing pointed at you.. just pointing it out for the BP mass's who tend to read this stuff not know the rules or laws and go off half cocked and get themselves in trouble. Ignorance as they say is no excuse in this business.
Not in foreclosure no problem.. I remember when I lived in Cupertino and the first run up.. and the Asian's were moving in in mass. it was no uncommon to have 1 to 3 a week knock on our door and offer cash for our home... this was the mid 80s
who ever la grand is and if people think he dreamed up door knocking I have a memo that says I never heard of him and door knocking has been alive and well for decades nothing new there.
Jay, Ron LeGrand is the godfather of "no money down" REI... unless you want to consider his first mentor (Carlton Sheets) or someone before them, as such? (LeGrand got into REI , in 1982.) And you really should look into his (current) approach to do ACTS (no equity, reassign the LO and get out of the deal) and 'high end' lease options, and let me know what you think? (And his 'training partners,' the "Wolff couple," in Mesa.)
Message me for my email addy and I'll send you some links to his videos. (Owner Financing, utilizing cooperative and sandwich lease options (excluding Texas, over 179 days) or (outside states like Cali) Sub Tos and wraps, lease purchases, etc.) If I were smart(er?) and dropped some poundage, so I could again "stand the HEAT..." I'd relocate to say Texas, and buy under $125k. abodes using 'private' investor money, and then start buying cheaper houses on 5- 10 year financed notes and 'lease purchase' them out, holding the notes... Anyone here want to be, "the bank?" (Mitch Stephen, style...) If I had the backing, I'd be doing $1million plus LO deals here in Cali, then move to say TX and work with a team... to do, just that!
And I think we can "put a empirical fork in" the Western states, Jay... I'm very SAD, to say. (As nearly ALL of my immediate family is either in CA, or OR.)
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Scott T. I am aware of each and every one of those techiques my dad had a company in the late 70s called California wrap we were doing wraps and AITDs before anyone knew what they were... nothing new for me here... but I wish you the best with it..
Originally posted by @Jay Hinrichs:
this may not be the case today but since no one mentioned it.
in CA I believe the lender has an option at either 5 days or 3 days prior to the sale to not accept delinquent payments and can demand full payment.. again at their option.
Whereas, here in the NW OR WA they have to accept it right up to sale date if its in their office in cash or cashiers check prior to the crier crying the sale..
law could have changed but that is the way it used to be.
I have done a bunch of sub too in my day as well.. but I did get a few called.... it happens for sure.... Have not done thousands but probably over 100 of them..
5 days in Cali.
Originally posted by @John Payne:
@Jay Hinrichs That's great for California since I live here. What were some of your exit strategies for when the bank called the loan due? Did you have cash reserves, or were you able to get financing?
@Ron S. No feelings frayed here. I tend to take hard stances in discussions because I feel we can get a little closer to the heart of the matter. And after new data and new information, I can do more research and decide the better approach and change my opinion. And yes, I do actually try to put my college degrees to use for critical thinking rather than going to sleep with Leonardo Dicaprio and Christian Bael every night. I try to find original sources and court cases to explain the subtleties. I definitely do not have the experience in the banking industry that you have, and I appreciate your relevant insights.
I do want to understand the example you gave though. The borrower, the agent, and the straw purchaser misrepresented (by omission) info on the PSA which constituted the fraud, not necessarily because an investor took the property subject-to. Is there a difference from your perspective? I understand that the bank has the obligation to comply with federal policy and can get in trouble if they don't. But is every person currently doing subject-to deals (many on BP) committing fraud simply by engaging in taking title subject to the existing mortgage? In your opinion, is it wholly illegal for a subject-to arrangement?
@Scott T. I think you're on to a niche that can definitely use the help, but with any creative financing strategies there are pitfalls because some of the strategies sometimes work in a grey area. There are plenty of predatory lenders and investors and scammers that really do make it a tough space to work in. But we definitely have some examples here at BP of investors doing it the right way and with integrity.Nothing illegal about Subject To from a statutory standpoint. Almost all security agreements in real estate contain due on sale clauses and as we've discussed adnauseum, some enforce it, some don't. Some find out about it and enforce it, some never find out about it and don't do anything. It's a gamble and a risk and sometimes pays off but i would shy away from that for any investor short of the seasoned pro that is aware of the risks of the gamble and more importantly, has an exist strategy if the due on sale clause is triggered and exercised. I've seen people lose good money because they couldn't time their exit to get out of it intact.
The example I cited was a short sale, not a subject to. I was merely trying to demonstrate that the parties to the transaction thought they weren't doing anything wrong, really and that they were just being creative and that everyone was getting a piece of something. Bank got paid most of their money, owner got to keep their home, agent got a commission, straw buyer got a commission. The only problem with them is they now have bunkmates and bland meals three times a day.
Well the ACTS system wasn't developed until about 2012, but basically all it is... is a so- called '"cooperative lease option," reassignment. However targeting wealthy people and multimillion $ homes, is more to my liking. (i.e. To owner finance LO tenant buyers with six figures to put down, that are over 50% likely to CLOSE on the deal...) But I need to start, somewhere. (i.e. More than likely ACTS deals, as the 'distressed' or not seller need NOT have any equity... and you simply reassign the contract, collect $ X grand, and are OUT of the deal... and on to the next one.)
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Originally posted by @Jay Hinrichs:
@John Payne @Scott T. there are strict laws dealing with those in foreclosure in CA OR WA.. before spending a bunch of money and getting all fired up that your going to be helping people .. you may want to read up on those.. its not like the old days laws changed in 07 and 08 because of all the fraudsters out there stealing peoples equity.. No implication just saying that is what created these very very tough foreclosure rescue laws and the reason we don't do it any more is at least in most instance its not worth the time or trouble.. cant make enough money on them to justify doing this unless your running a non profit.. which folks do do. and maybe that's what you guys are looking to do.
I'm hesitant to bring this up for fear that it will be abused, but curiosity has gotten the better of me ... there is a misconception that in a foreclosure the property owner loses all their equity. If the original owner and/or you as an investor buy a property, sub-2 or otherwise, and the foreclosure goes through that you necessarily always get wiped out. However, I don't think that this is necessarily true for the owners, and there is in fact a legal procedure whereby the banks distributes the excess proceeds (after paying back principal, fines, arrears, etc.) via the trustee back to the owner.
The reason I am hesitant to bring up is because this has been highly abused by fraudsters in the past and I think has a lot of nuanced regulation around it now to prevent fraudsters from convincing homeowners in pre-foreclosed properties to basically give them their property for practically nothing right before they get "wiped out" and then letting them go to foreclosure intentionally to go after the excess proceeds. So, as far as I know if you as an investor don't get things resolved prior to foreclosure and if you are on title as owner when this happens, then you still may be able under some circumstances recoup some capital post foreclosure, but that seems to be a legally and ethically slippery slope especially if it looks like it was your strategy all along to buy to let it go to foreclosure and collect these excess funds. Thoughts? Anybody else in banking (@Ron S.) want to comment?
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@David Faulkner while that is exactly right... what your saying.. the reality is most don't have a lot of equity other wise they would just sell on the open market.. mainly because they had or have a second or a maxed out Heloc.. There is just not a lot of sub too opps these days.. but people do sell that way when for whatever reason they just want out..
@Jay Hinrichs and @David Faulkner
Yet another reason WHY (in states where Sub Tos are now a slippery slope) to target owner financed LOs, vs. doing sub tos, or even buy- n- holds (before the next staged, 'correction') in such OVERPRICED markets as say most of either US / CAN coasts, for e.g. (However now a nearly wide open playing field for properly structured sandwich option, or simple reassignments, when there is under 20% equity, leaving no "meat, on the bone," after 10- 15%+ goes to the sharks!)
And while there is potentially money still 'on the books' to be redeemed, what are the ODDS in an overpriced marketplace, like most of us now reside in? I heard part of a podcast recently on doing this with '"tax liens" (same principles, apply?) but one could also call the bank a fraudster, and lay claim to 'real property' and technically avoid foreclosure, as some people have done... or to simply 'nullify' false claim to the land, water and mineral rights, where applicable. But now I'm WAY 'off topic,' or repeating myself. The Q? IS? Who DARES to go after those spoils, or the system?? I myself have better things to do that rock the illusionary boat, of Maritime Admiralty 'commerce,' on the high seas of war.
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Scott T.:
@Jay Hinrichs and @David Faulkner
Yet another reason WHY (in states where Sub Tos are now a slippery slope) to target owner financed LOs, vs. doing sub tos, or even buy- n- holds (before the next staged, 'correction') in such OVERPRICED markets as say most of either US / CAN coasts, for e.g. (However now a nearly wide open playing field for properly structured sandwich option, or simple reassignments, when there is under 20% equity, leaving no "meat, on the bone," after 10- 15%+ goes to the sharks!)
And while there is potentially money still 'on the books' to be redeemed, what are the ODDS in an overpriced marketplace, like most of us now reside in? I heard part of a podcast recently on doing this with '"tax liens" (same principles, apply?) but one could also call the bank a fraudster, and lay claim to 'real property' and technically avoid foreclosure, as some people have done... or to simply 'nullify' false claim to the land, water and mineral rights, where applicable. But now I'm WAY 'off topic,' or repeating myself. The Q? IS? Who DARES to go after those spoils, or the system?? I myself have better things to do that rock the illusionary boat, of Maritime Admiralty 'commerce,' on the high seas of war.
Scott your being influenced by those that sell these systems.. they make money with the illusion that there is big money to be made can these schemes work sure.. do they not very often.... but you need to pay them to figure that out.. Just like the flipping shows that talk about you too could be making 40k a MONTH flipping homes... can it happen sure.. do you need a few million and a big team yup does the average investor have that nope... Nothing new in real estate other than default swaps from a few years back otherwise just same ole same ole stuff being repackaged and regurgitated to the new investor.
Indeed! There's next to nada, anew... aside from the latest 'regs' to stem the tide of the 'sheeple,' awakening... or upsetting their apple carts, like bulls in their China closets... or derivatives, default swaps and crypto currencies. As soon as someone figures out how to 'game' their rigged system, they co- opt and control them, as par, since the dawn of so- called "civilization..." (Then they either 'convert,' the "heathens?" Or throw them out of a 50 story window!?) When you control the 'money,' markets, politics, war machine, legalease and media, edu, etc., you control the system... ;-) I am not paying these gurus much, nor giving my better ideas to them. So who is 'gaming,' who!? But thank you kindly for your concern, sir! :-)))
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Originally posted by @Scott T.:
Indeed! There's next to nada, anew... aside from the latest 'regs' to stem the tide of the 'sheeple,' awakening... or upsetting their apple carts, like bulls in their China closets... or derivatives, default swaps and crypto currencies. As soon as someone figures out how to 'game' their rigged system, they co- opt and control them, as par, since the dawn of so- called "civilization..." (Then they either 'convert,' the "heathens?" Or throw them out of a 50 story window!?) When you control the 'money,' etc., you control the system... ;-) I am not paying these gurus much, nor giving my better ideas to them. So who is 'gaming,' who!? But thank you kindly for your concern, sir! :-)))
I can't wait until if/when you ever need to apply for a mortgage or any other sort of loan or a job at any one of these evil corporations ... I would give just about anything to be a fly on that wall ... you corrupt pig bankers gaming the system to control the masses, well you can never control me, now give me some money! Who is 'gaming' who indeed. LOL.
- Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes9y
@Ron S. The bank often does not know when properties change title. I buy subject to here in Hawaii all the time, and the bank still sends the preservation people to do the yard work long after closing. The reality is they have so many mortgages in default that they cannot keep track of everything.
Originally posted by @David Faulkner:
Originally posted by @Scott T.:
Indeed! There's next to nada, anew... aside from the latest 'regs' to stem the tide of the 'sheeple,' awakening... or upsetting their apple carts, like bulls in their China closets... or derivatives, default swaps and crypto currencies. As soon as someone figures out how to 'game' their rigged system, they co- opt and control them, as par, since the dawn of so- called "civilization..." (Then they either 'convert,' the "heathens?" Or throw them out of a 50 story window!?) When you control the 'money,' etc., you control the system... ;-) I am not paying these gurus much, nor giving my better ideas to them. So who is 'gaming,' who!? But thank you kindly for your concern, sir! :-)))
I can't wait until if/when you ever need to apply for a mortgage or any other sort of loan or a job at any one of these evil corporations ... I would give just about anything to be a fly on that wall ... you corrupt pig bankers gaming the system to control the masses, well you can never control me, now give me some money! Who is 'gaming' who indeed. LOL.
Someone is watching way to much late night TV...
Originally posted by @Loren Clive:
@Ron S. The bank often does not know when properties change title. I buy subject to here in Hawaii all the time, and the bank still sends the preservation people to do the yard work long after closing. The reality is they have so many mortgages in default that they cannot keep track of everything.
Loren, I would disagree with you. Working for a bank, and working in banking for 25 years, I would disagree with you. You buy property in the largest leasehold estate, state, in the the country and your situation is far different than the other 49 states. I've never said anyone can't buy subject to. I said they do it with a certain risk. And banks do know when properties change title. It may take time but they know.
Your reality is flawed as well that "there are so many mortgages in default that they cannot keep track of everything". Hawaii is ranked 26 in foreclosures currently. 1 in every 2,161 homes is in foreclosure. Compare that to Jersey 1 in every 515 or Delaware 1 in 753. The national averages is 1 in 1,636 and considering Hawaii is 1 in every 2,161, your theory erodes quickly. Foreclosures nationaly are at the lowest level since 2006. Hawaii isn't even on the map for backlogged foreclosures, unlike Florida and New Jersey so, while i'm happy you are enjoying the success of your subject to purchases, Let's not use Hawaii as the baseline for analysis.
Q: "I can't wait until if/when you ever need to apply for a mortgage or any other sort of loan or a job at any one of these evil corporations ... I would give just about anything to be a fly on that wall ... you corrupt pig bankers gaming the system to control the masses, well you can never control me, now give me some money! Who is 'gaming' who indeed. LOL." UnQ.
I have no problem avoiding dealing with bankers, to date... that's a big part of WHY I'm getting into REI (as a business model) and should be our primary objective for doing so, if one have any real MORALS. And also because the one- side, hopelessly passe' 'establishment' clearly is beyond 'corrupt' to it's very CORE... and therefore MUST BE REPLACED... And as for those working for 'publicly traded' corporations, you're simply part and parcel, of the overarching PROBLEM... so if I "hit a nerve," then so be it? Or if you're rather saying "good luck with that..." then you seriously underestimate me, and my level of 'resolve' after what I've endured, sir. ;-)
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