FL MORTGAGE BROKER: attach a "LOW JACK" to your LLC name

36 Replies

As a FL Mortgage Broker, Real Estate Investor and Landlord, my advice to investors who are opening new LLCs, is to consider include the word RENTAL(s) in the name of your LLC.

Examples:

Smith Rental Properties, LLC

Sunshine Rentals, LLC

Reason why? 

In the Mortgage and Rental Industries, anything negative that has to do with prior housing  stands out like on the Credit Report like a Neon Sign with arrows pointing at it!

When a Lender, Apartment complex or Private Landlord sees a Lien or Judgment that says Smith Rental Properties, LLC, it's likely it will prevent the borrower or renter from obtaining the home that want to purchase or rent until it is paid or settled and removed.

So often I'll see a judgment on a credit report that will be in a prior landlord's actual name like John Smith.  However, what's to keep the defendant who lost in Small Claims Court, that screwed over John Smith / landlord for past due rent and trashed his property, from saying that $4,000 Judgment was simply a pissed off uncle over the sale of horse, etc.?

BUT...when you have that "Low Jack" (the word RENTAL in the LLC) on a Judgment, you got a pretty good chance of getting paid, sooner or later as one day out of the blue, a Lender contact you asking where the borrower needs to mail the payment so he can get the mortgage needed to close on a home!

 

Attach a "LOW JACK" to your LLC name!

     

i get the premise  but i am thinking any lien would have to be cleared for a lender to make a new loan ???

I can see that though warning other landlords though for sure.. of a potential dead beat tenant that has a nice public assistance ring to it..

@Jay Hinrichs , exactly, it's far more likely the judgment will be required to be paid, so far more the suffering party, the prior landlord will get paid in the future instead of lenders (i.e. some portfolio &  private lenders) who may not make it a requirement to fund the loan.

No matter what, its like attaching a Low Jack that flashes like a Neon Sign when someone pulls a report that says..."Look at me, I have a bad history housing history!" 

Originally posted by @Steve McRory :

@Jay Hinrichs, exactly, it's far more likely the judgment will be required to be paid, so far more the suffering party, the prior landlord will get paid in the future instead of lenders (i.e. some portfolio &  private lenders) who may not make it a requirement to fund the loan.

No matter what, its like attaching a Low Jack that flashes like a Neon Sign when someone pulls a report that says..."Look at me, I have a bad history housing history!" 

Interesting in my 30 plus years of HML lending I have never made a loan subject to a judgement.. you as lender would be put into second position and the Judgement holder could if they wanted to do a sherrifs sale and wipe you out..

the real benefit to me is landlords pulling credit..

just my experience and who I write my escrow instructions..  

you said private or portfolio lenders will close sub too a judgement like this... I am replying that in my 30 plus years as a HML I have never done that .. this in over 3k files.. I would never do that..

@Jay Hinrichs , okay you wouldn't care, that's great. 

But there are many other lenders that do care and require anything that has to do with Prior Housing to be settled, thus, the prior landlord gets paid.

The point here is that if a tenant screws an investor over, something as stupid simple as including the word RENTAL in the name of an LLC can prove to be very beneficial for the Investors here on BP in multiple ways.

too funny your saying the absolute opposite as I am saying how can you not understand .

I would NEVER make a loan and let a current lien stay on title and make the loan in second postion.

Very simple my escrow instructions go in and say that title company can only fund when they can put me in first position and any liens or judgements must be removed from title.. simple as that.

Exactly, as a lender, you would not want to loan that person any money until the settled their bad debt with their prior landlord.

If we still don't understand each other, just let this post go and read the new topic discussions I'll be posting

They must not require an understanding of lien priority in order to pass the FL mortgage broker exam.

The premise behind this post is good. He's saying use the word rental when creating an LLC to hold title to your properties as opposed to creating an LLC that doesn't so that it stands out to future landlords when they review a tenant's credit report. Thus making the tenant's life just a tad bit more difficult which makes them just a tad bit more likely to pay off their judgement to the landlord who exerted no additional effort to name their LLC the way they did. Simple stuff. Good idea.

Originally posted by @James Wise :

The premise behind this post is good. He's saying use the word rental when creating an LLC to hold title to your properties as opposed to creating an LLC that doesn't so that it stands out to future landlords when they review a tenant's credit report. Thus making the tenant's life just a tad bit more difficult which makes them just a tad bit more likely to pay off their judgement to the landlord who exerted no additional effort to name their LLC the way they did. Simple stuff. Good idea.

The context is the judgment debtor getting a new mortgage.

Premise still good?

Which of these judgments should be paid ... a judgment to James Wise, James Wise Rentals, LLC, neither or both?

Lol. @Tom Gimer do you actually read everyone's full comments before you jump at the opportunity to toss out your 1 liners?

@Steve McRory said the following 

In the Mortgage and Rental Industries, anything negative that has to do with prior housing stands out like on the Credit Report like a Neon Sign with arrows pointing at it!

When a Lender, Apartment complex or Private Landlord sees a Lien or Judgment that says Smith Rental Properties, LLC, it's likely it will prevent the borrower or renter from obtaining the home that want to purchase or rent until it is paid or settled and removed.

what's to keep the defendant who lost in Small Claims Court, that screwed over John Smith / landlord for past due rent and trashed his property, from saying that $4,000 Judgment was simply a pissed off uncle over the sale of horse, etc.?

So to answer your question yea his premise is still good. & yea Tom we get it, your a smart guy with title experience. I also own a title company my man, i'm not impressed.

Originally posted by @Tom Gimer :

@James Wise Why didn't you continue quoting Steve's post, James?

 Lol. You're too much for me Tom. Cavs Pacers just started tho, so I can't continue to play who is smarter with you right now.

Somebody tag me when Tom starts trolling the threads looking for spelling errors. 😂

Hey @James Wise ... Black Tie Title hasn't been around long enough for the first title claim to surface, but it is surely passing horrendous costs onto consumers. The target is on your back now bro.  @Steve McRory will tell you all about it.

@Jay Hinrichs @Steve McRory I think you guys may have been debating different points. Jay, I think Steve was referring to judgements against a person's own credit where as you may have been referencing specific liens against property you're loaning on? I think Steve is talking about landlord claims against tenants that land in small claims court and follow that tenants credit...not liens superior to yours on a property. As a private lender, do you require ones personal credit to be free of judgements (assuming other factors are satisfactory)? Just curious, I'm personally free from any judgments and also not asking for a loan :)

BTW- I have no beef with COMMERCIAL Realtors as they are a completely different breed or Realtor.

Unlike the typical S. FL Triple R (relic residential relator), Commercial Realtors are generally very good negotiators and display a lot more common sense throughout deals.

Furthermore, unlike the typical Triple R, who constantly reminds you of how many years they've been selling real estate while they cause unnecessary and avoidable problems from day one to closing, who have the negotiating skills of a rock, Commercial Realtors are generally pretty impressive.   

@Tom Gimer , there's a reason why so many thousands of Mortgage Industry people went to work in the Title Ins. industry over the past decade, but I don't know of any Title Agents who have become Mortgage Brokers.

Why is this do you think? 

You know why and all Mortgage Brokers reading this know you know why reading this, but give us your spin on this fact.

Originally posted by @Russell Holmes :
@Jay Hinrichs @Steve McRory I think you guys may have been debating different points. Jay, I think Steve was referring to judgements against a person's own credit where as you may have been referencing specific liens against property you're loaning on? I think Steve is talking about landlord claims against tenants that land in small claims court and follow that tenants credit...not liens superior to yours on a property. As a private lender, do you require ones personal credit to be free of judgements (assuming other factors are satisfactory)? Just curious, I'm personally free from any judgments and also not asking for a loan :)

What is a judgment against a person's own credit?

In many jurisdictions, judgments entered (or recorded) are automatic liens against all property owned by the debtor in that jurisdiction. This is why title companies run judgments on all parties involved. A judgment entered anywhere can be re-recorded in the jurisdiction where a debtor owns property, creating a lien... a subordinate lien perhaps, but still a title issue. My guess is Jay is not going to lend behind a judgment lien or when a judgment lien will attach behind his mortgage and put the property underwater immediately.

Originally posted by @Steve McRory :

@Tom Gimer, there's a reason why so many thousands of Mortgage Industry people went to work in the Title Ins. industry over the past decade, but I don't know of any Title Agents who have become Mortgage Brokers.

Why is this do you think? 

You know why and all Mortgage Brokers reading this know you know why reading this, but give us your spin on this fact.

Because Affiliated Business Arrangements (AfBAs) are shams?

@Tom Gimer does that apply to tenants who get a judgement against themselves years before ever buying property? I'm not being sarcastic, I'm actually curious and don't know. The more a judgement sticks to everything someone's name is on the better, but I didn't realize judgements could cling to properties uninvolved in the court proceedings.
Originally posted by @Russell Holmes :
@Tom Gimer does that apply to tenants who get a judgement against themselves years before ever buying property? I'm not being sarcastic, I'm actually curious and don't know. The more a judgement sticks to everything someone's name is on the better, but I didn't realize judgements could cling to properties uninvolved in the court proceedings.

Absolutely. Judgments are not property-specific. They expire X years after being entered and they accrue interest at Y% per annum (with X and Y differing per local law).

Ah gotcha. The two aren't as unrelated as I thought. I wonder how many small time private lenders make that mistake and end up subordinate to some large judgment unknowingly. Thanks for the info, could save me some money someday!

@Tom Gimer , all that is good, and good to know too as it further proves my Topic point of when opening a new LLC, it can be very beneficial to include the word "RENTAL" in the name of the LLC.

It make life a lot more difficult for any tenant, who has screwed over an Investor on rent or trashes their property, where the Investor titles their rental property in the name of their new LLC.

When I pull credit on a borrower and see a judgment on their credit, which Tom Gimer will likely get paid first:

Tom Gimer 

or 

Tom Gimer Rentals, LLC?

  

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