Who is the trustee? and why is he buying my deals?? LOL

Question

Guys... anyone could explain to me how the trustee guy is buying all his properties? There is this title company that is owned by Mr X and he is the trustee and also investor. Isn't there a conflict of interest that he buys these?
I am having trouble understanding why the trustee is needed and when he is used, before it is an REO listed on the MLS.. kind of confused.. anyone would like to explain the need of the trustee and why he is needed?
thanks a ton

Don Konipol · Answer

Shelly is absolutely INCORRECT in all his points.

1. Trustee is NOT a neutral party, trustee holds the property in trust for a beneficiary.  In Trust Deed states the trustee would hold the property in trust for the lender, as beneficiary.  A trustee can also hold property in trust where the beneficiary is the property owner.

2. A trustee sale is NOT a sheriff sale in most states.  A sheriff sale is when a lien is perfected against a property, and a judgement is entered ordering a sale to the highest bidder by a law enforcement agency, usually the sheriffs dept. A trustee sale is when a foreclosure action is filed against a property owner, and the appointed trustee holds the auction sale.

3. There is absolutely nothing legally or ethically wrong with an individual being a trustee, investor and owning a title agency, as long as this relationship is disclosed to any concerned parties.

Everybodys particpation is encouraged; however posting blatantly incorrect information (not opinion, but incorrect facts), i.e, posting information about which you have limited or no knowledge, is dangerous and inappropriate. Better to ask questions about subjects you are unfamiliar with than to post incorrect and unknowledgeable answers.

Bill Gulley · Answer

As Don is pointing out, most states that have adopted the standard deed of trust people may call it a sherriffs sale as in the deed of trust it appoints a trustee and then goes on to say, something like, in the event the trustee is unable or refuses to act then the sherriff is appointed to conduct the sale....

In the real world, the lender generally appoints another trustee, as in my area, the sherriff just won't do it, they don't have time, but in some areas, they may and actually it can be a "profit center" to conduct sales.
 
In states that do not require judicial foreclosures, going to court and obtaining a judgement, the trustee simply follows proceedures, giving notices and publication as required, set a date for sale and goes to the palce designated and conducts the sale. I have acted as trustee and conducted sales myself, as often the trustee need not be an attorney.

And as Don points out, there is no restriction against the trustee in making an offer, but frankly, the lender will set the price.

I suggest you find those in the loop and work with them if you are specializing in these deals.

Chris Martin · Answer

Financexaminer gets my vote on this topic for "I suggest you find those in the loop and work with them if you are specializing in these deals."

Trustees in the context of a power of sale are "independent" parties. The use of "neutral" is a bad word choice... in NC at least, the trustee can't be an agent of the owner of debt (e.g. bank) hence the debt holder substitutes as trustee an attorney firm to execute the power of sale. Regarding "...as often the trustee need not be an attorney" this is for sure state specific. In NC, trustees in a power of sale via the special proceedings division must be attorneys. Here's a reference about this topic form a trustee who I have bought property from: http://www.usfn.org/AM/Template.cfm?Section=Home&CONTENTID=2472&TEMPLATE=/CM/HTMLDisplay.cfm&SECTION=Article_Library

After the last post from J M. I think the "trustee" Mr X is not a trustee in the context of a power of sale, but rather a trustee of a land trust or some such. Without more detail, I can't tell for sure. Not that it really matters, but I've never seen or heard of a power-of-sale trustee (or trustee firm) engage in property acquisition 'for gain' from their own sale(s).

J M. · Answer

That was the best advise I could have gotten. I will meet with him on Friday.

He has another trustee friend that he works with and they quit claim the properties to each other, also they buy and put the properties in trusts. They have fun too.. I saw one with the owner as " Mr X rocking the boat trust" LOL...They do great rehabs too. A lot to be learned from him and his team. Plus he can be my title company. 
Can't wait to get started. 
thanks for your comments!

Bill Gulley · Answer

What you might be saying is that the guy who serves as trustee seems to be ending upwith the properties. If it gets to the courthouse steps, he can't bid on it. but if it goes to the lender, he is no longer the trustee, he might make an offer after the sale. He might have a deal with a bank to buy all their REO under certain conditions.

Before any sale, he could buy the note. A trustee can be changed at any time. Just to keep it clean, have the bank assign a new trustee then buy the note or the property as a pre-foreclosure or even a short sale.

There are others involved in mortgaged properties.  Who is the first to know that a foreclosure is on the way?

First, the bank, then the servicer if any, then the trustee, then a title clerk to run title, the BPO agent who drives by and about the same time, the lady at the local newspaper before they publish the notice and maybe the mail man, since by now, he has an idea of what a certified letter means from the bank and then the county clerk. So, there are several peoplein the loop who know what's on the way before the public ever knows.

You could probably get an appointment with that attorney and just ask him, maybe he is flipping them, maybe he doesn'twant them all, maybe he could call you after publication. If you can't beat'em, join'em!

Anson Young · Answer

Property becomes REO after the trustee sale.

Property is in foreclosure, it goes to the trustee sale.  If noone else bids on it, the bank buys it back.  THEN it goes through the process of becoming an REO, after the bank owns it.

J M. · Answer

I guess I am confused as to how the property becomes an REO ? 
So before the bank puts the property in his name to then find a realtor and list it in the MLS, they attempt to use the trustee to auction the house?

Chris Martin · Answer

I'm a little confused. Is this a purchase from a trustee sale, like a power of sale (via foreclosure) in a trustee state? You don't say what state you are in or what kind of sale this is... or details about the deed transfer.

Shelly Swanzy · Answer

Trustee
A neutral party who advertises the foreclosure property for sale and conducts the auction to sell said property to the highest bidder.

Trustee Sale
An auction of real property conducted by a trustee. Also known as a Sheriff's Sale.

It may be that Mr. X decided to become a Trustee, open his own title company, and become an investor because he found a "loop hole" in the system that would allow him to do what he is doing "legally".

It doesn't sound like it should be legal but there are people out there making millions because of loop holes.

If you look at it from Mr. X's view = he basically gets paid 3 times for every property  #1 selling it at auction,  #2 selling it as an investor, and #3 using his title company to close the sale.  In this insance, wouldn't we all like be brilliant enough to be Mr. X if it is legal?

On the other hand, if Mr. X just thinks he found a loop hole and it really isn't as legal as he percieved, well, then I wouldn't want to be Mr. X.  If he is doing something that is not legal --- it will only be a matter of time before he gets caught -- I'm sure you're not the only one who has caught on to what he is doing.

Who is the trustee? and why is he buying my deals?? LOL

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