Investor Psychology

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Luther Wilson III
  • Property Manager
  • Kansas City, MO
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I Wish A Bank Would Call My Loan Due

Luther Wilson III
  • Property Manager
  • Kansas City, MO
Posted May 28 2022, 10:14

Let’s Go - I know this is gonna ruffle some feathers and get people going 🙂

I know, it’s counterintuitive…  Why would I want the lender to call the note due? 

1.  So I can learn more about the actual process

2.  To help dispel some fears and myths 

3.  In order to strengthen my investment resolve and ability

4.  To figure out whether it’s a good fight to take on with the attorney or not 

Kansas City, Missouri

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Account Closed
  • Wisconsin
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Account Closed
  • Wisconsin
Replied May 28 2022, 10:30

Inflation

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Caroline Gerardo
  • Lender
  • Laguna Niguel, CA
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Caroline Gerardo
  • Lender
  • Laguna Niguel, CA
Replied May 28 2022, 10:45

You mean you want to go into foreclosure and have that show on your credit ?  

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Joe S.
  • Investor
  • San Antonio
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Joe S.
  • Investor
  • San Antonio
Replied May 28 2022, 12:11

You might wanna give the audience a backdrop of what you’re talking about if you really want them to engage. I’m assuming by this post you want people to engage and even disagree if that is their stance.

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Bill Brandt#3 Home Owner Association (HOA) Issues & Problems Contributor
  • Investor
  • Las Vegas, NV
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Bill Brandt#3 Home Owner Association (HOA) Issues & Problems Contributor
  • Investor
  • Las Vegas, NV
Replied May 28 2022, 13:38

Cool. Call the bank and tell them you are the new owner and that the person they loaned the money to sold you the property. EZPZ. Let us know how it goes. Shouldn’t be a big deal. 

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Luther Wilson III
  • Property Manager
  • Kansas City, MO
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Luther Wilson III
  • Property Manager
  • Kansas City, MO
Replied May 28 2022, 14:47

Pardon me for being rather facetious.  Lol.  I’m working on my online humor a bit.  I guess if you know, you know.  😉

This post was placed under “Investor Psychology” for a reason…  The whole point was to get a lil’ dialogue around why so many investors are scared or overly concerned about something that would rarely come into play - the due on sale clause.  That is, if you know what you’re doing and if you have multiple exit strategies for every deal. Or at the very least - access to additional capital, in the event that you’d need to exit with a payoff or such.

Call me crazy if you want, but I think there’s something exciting about the frenzy of taking down a deal or solving a “problem”.  Almost like an addiction that a lot of us investors, entrepreneurs, CEOs, or sales people have.  Something that definitely needs to be monitored and or reigned in from time to time.  

Nonetheless, another point of the message here is to get you to see how our minds work...  We could easily spend a couple hours coming up with reasons or excuses not to do a certain thing (in this case making some type of investment, perhaps). Yet we won’t seek out a good advisor on it. Let alone offer to pay them lol.  Whatever “it” is. 

 There are Investors out there who have been doing creative financing for years.  I’d venture to say there’s a small percentage of them in every major market who are quietly getting ridiculous returns on their investments and living quite well.  Are you catching my drift?

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Chris Seveney#2 House Hacking Contributor
  • Investor
  • Northern Virginia
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Chris Seveney#2 House Hacking Contributor
  • Investor
  • Northern Virginia
Replied May 29 2022, 05:42

Assuming your interest rate is lower than todays rates you would not want the loan called. Regarding the process, there is not much to the process, the bank will send a letter outlining why they are calling the loan and include the total due in your statements. Once 120 days passes they will start the foreclosure process. You can get a lawyer but if you did break the contract it will be difficult to win. Even if you did win you would be responsible for the late fees, past due interest and their legal fees even if you were to get a modification.

This is one of the things I wish borrowers would understand as we buy distressed debt and when borrowers do not come to the table to talk or drag things out, the legal fees continue to add up and they are added to the loan. 

the only time where you would want them to call the note is if your rate was higher than the rate you could get now, but again there you would just look to refinance.

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Nathan G.
  • Real Estate Broker
  • Cody, WY
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Nathan G.
  • Real Estate Broker
  • Cody, WY
ModeratorReplied May 29 2022, 06:32

I'm even more confused by your second post.

I don't know anyone that's had their loan called so it's an irrational fear.

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Dwayne Poster
  • Investor
  • Van Isle
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Dwayne Poster
  • Investor
  • Van Isle
Replied May 29 2022, 12:47
Quote from @Luther Wilson III:

 ... Or at the very least - access to additional capital, in the event that you’d need to exit with a payoff or such...

Not really an issue then. I can payout a mortgage without them demanding it, for the exercise. If my deals are collapsing onto themselves, a reality in the not too distant future for many, the lessons can come hard.