What The Gurus Do Not Teach You In Note Investing - Part 2

[Chris Seveney]

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

[Patrick Roberts]

To attach the deficiency judgement to the primary residence, did you have to show some kind of conveyance or involvement of that property in the traceability of the funds, or was it just a blanket attachment to all assets? If I understand correctly, this is state by state and isnt always allowed. I could be wrong, though. I personally think it's way too easy to escape debts in modern society, so I'm curious to know the mechanics of this particular situation.

[LaTonya Clark]

@Chris Seveney

Love it! Keep it coming!

[Wesley I.]

@Chris Seveney

These stories/case studies are fun to read.

I bet you have enough stories for a paperback

[Chris Seveney]

@Wesley I.

Yep used to share a lot on the podcast back in day - need a way to vent 😀

[Chris Seveney]

@Patrick Roberts

Deficiency attachs to the individual - then record it in the county and it attachs to assets.

You are correct it’s a state by state thing but most states it is allowed - it also matters if it’s a primary or investment

For example I believe Arizona you cannot get a deficiency after sale on Owner occupied but can on investment and in Texas I don’t believe you can attach to the home.

Btw this is not something I typically do - but if the borrower is not going to play ball, then that’s different

[Chad U.]

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

Oh, why didn't you start off with "we've been buying NPLs since 2010" and begin each and every post with that? Lol (inside joke)

I love the deficiency judgment play, especially for the rent skimmers who have multiple properties!  

Here's another tip for all those out there that gurus don't teach you.  Never release or satisfy a mortgage that you think is worthless or uncollectible.  I just got an email yesterday from a real estate broker looking for a release on a property under contract on behalf of the borrower.  We had charged it off a couple years ago, but never released it.   My response, sure thing, we can release it for a reduced payoff. 

Mind you, there are some states, specifically NY where you could be on the hook for code issues on vacant properties, even if you are just the lender, so best to do your homework on each state. 

[Patrick Roberts]

Quote from @Chris Seveney:

@Patrick Roberts

Deficiency attachs to the individual - then record it in the county and it attachs to assets.

You are correct it’s a state by state thing but most states it is allowed - it also matters if it’s a primary or investment

For example I believe Arizona you cannot get a deficiency after sale on Owner occupied but can on investment and in Texas I don’t believe you can attach to the home.

Btw this is not something I typically do - but if the borrower is not going to play ball, then that’s different

 Gotcha - that process has always been a little murky for me. Good to know.

[Jay Hinrichs]

Quote from @Chris Seveney:

@Patrick Roberts

Deficiency attachs to the individual - then record it in the county and it attachs to assets.

You are correct it’s a state by state thing but most states it is allowed - it also matters if it’s a primary or investment

For example I believe Arizona you cannot get a deficiency after sale on Owner occupied but can on investment and in Texas I don’t believe you can attach to the home.

Btw this is not something I typically do - but if the borrower is not going to play ball, then that’s different

pretty much all west coast states you cannot get a deficiency judgement on a owner occ purchase money mortgage / deed of trust..  CA OR WA AZ NV  etc etc.  In texas you can for sure and many other states.. this is why buying notes one has to really dig deep into EACH states rules etc.. This is also why you had strategic foreclosures during the GFC out west.. folks upside down they know they can just walk with only credit dinged.. so they live for free as long as they can then move on .. Cant use that strategy in Texas the banks will sue you..

[Jay Hinrichs]

Running title on a Deed in Lui is to those of us that trade in the bizzness common knowledge but agree you take a mom and pop starting out.. Well they wont know it and to save money by not having a lawyer advise them .. boom they take title to all sorts of nasty crap.

[Nate Marshall]

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

So many cases studies across REI as a whole regarding gurus. I have people in my own organization who have case study after case study about gurus and gators alike.

[Ivan Terrero]

@Chris Seveney

You should write a book about your experiences.

Thanks for sharing.

[Chris Seveney]

@Chad U.

Did you see the post where the person did seller finance in NY and asked if they could foreclose without an attorney?

Woof that person was not educated on seller finance

[Chad U.]

Quote from @Chris Seveney:

@Chad U.

Did you see the post where the person did seller finance in NY and asked if they could foreclose without an attorney?

Woof that person was not educated on seller finance

Yes I had a pretty good chuckle over that.  One can barely foreclose in NY WITH an attorney.  

[Ivan Terrero]

@Chad U.

https://nypost.com/2021/07/03/long-island-man-who-hasnt-paid-his-mortgage-in-20-years-dodges-eviction-again/

[Jay Hinrichs]

Quote from @Chad U.:

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

Oh, why didn't you start off with "we've been buying NPLs since 2010" and begin each and every post with that? Lol (inside joke)

I love the deficiency judgment play, especially for the rent skimmers who have multiple properties!  

Here's another tip for all those out there that gurus don't teach you.  Never release or satisfy a mortgage that you think is worthless or uncollectible.  I just got an email yesterday from a real estate broker looking for a release on a property under contract on behalf of the borrower.  We had charged it off a couple years ago, but never released it.   My response, sure thing, we can release it for a reduced payoff. 

Mind you, there are some states, specifically NY where you could be on the hook for code issues on vacant properties, even if you are just the lender, so best to do your homework on each state. 

one other tid bit if you own a note and payments stop and you dont start foreclosure in  a certain amount of time ( typically a few years) the mortgage is now unenforceable.. I have bought a few properties from owners whose mortgage was striken off .. because the lender failed to foreclose.. these were in Washington state.. Now i cant see note investors not starting the action but I can sure see banks doing that then selling a note to some nub who does not know this.. Chad you ever seen this ? or heard of it.. was a new one to me.. what I love about our game of RE is no one knows everything and you learn new stuff every week.

[Chad U.]

Quote from @Jay Hinrichs:

Quote from @Chad U.:

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

Oh, why didn't you start off with "we've been buying NPLs since 2010" and begin each and every post with that? Lol (inside joke)

I love the deficiency judgment play, especially for the rent skimmers who have multiple properties!  

Here's another tip for all those out there that gurus don't teach you.  Never release or satisfy a mortgage that you think is worthless or uncollectible.  I just got an email yesterday from a real estate broker looking for a release on a property under contract on behalf of the borrower.  We had charged it off a couple years ago, but never released it.   My response, sure thing, we can release it for a reduced payoff. 

Mind you, there are some states, specifically NY where you could be on the hook for code issues on vacant properties, even if you are just the lender, so best to do your homework on each state. 

one other tid bit if you own a note and payments stop and you dont start foreclosure in  a certain amount of time ( typically a few years) the mortgage is now unenforceable.. I have bought a few properties from owners whose mortgage was striken off .. because the lender failed to foreclose.. these were in Washington state.. Now i cant see note investors not starting the action but I can sure see banks doing that then selling a note to some nub who does not know this.. Chad you ever seen this ? or heard of it.. was a new one to me.. what I love about our game of RE is no one knows everything and you learn new stuff every week.

Yes this is very common in trading of NPLs with very aged past due dates, which could be outside of the statute of limitations.  And the SOLs are not consistent across the country, as each state has its own period.  Most troublesome is that most state's SOLs, if not all, are based on caselaw rather than baked into the state code so it's not a simple Google search to find out.  Even worse is the SOL often changes with newer decisions so the precedent changes sometimes every few years in each state. That's why it's good to have a Rolodex of reliable Attorneys in each state that are proficient in creditor rights.  Having said that, sometimes you can even get conflicting opinions between lawyers. This is another thing that the gurus rarely teach as most have never likely been in the situation. SOLs is one the biggest risk in investing in NPLs, particularly long aged past dues. 

And don't even get me started on Laches as a defense by a savvy borrower's attorney......

[Jay Hinrichs]

Quote from @Chad U.:

Quote from @Jay Hinrichs:

Quote from @Chad U.:

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

Oh, why didn't you start off with "we've been buying NPLs since 2010" and begin each and every post with that? Lol (inside joke)

I love the deficiency judgment play, especially for the rent skimmers who have multiple properties!  

Here's another tip for all those out there that gurus don't teach you.  Never release or satisfy a mortgage that you think is worthless or uncollectible.  I just got an email yesterday from a real estate broker looking for a release on a property under contract on behalf of the borrower.  We had charged it off a couple years ago, but never released it.   My response, sure thing, we can release it for a reduced payoff. 

Mind you, there are some states, specifically NY where you could be on the hook for code issues on vacant properties, even if you are just the lender, so best to do your homework on each state. 

one other tid bit if you own a note and payments stop and you dont start foreclosure in  a certain amount of time ( typically a few years) the mortgage is now unenforceable.. I have bought a few properties from owners whose mortgage was striken off .. because the lender failed to foreclose.. these were in Washington state.. Now i cant see note investors not starting the action but I can sure see banks doing that then selling a note to some nub who does not know this.. Chad you ever seen this ? or heard of it.. was a new one to me.. what I love about our game of RE is no one knows everything and you learn new stuff every week.

Yes this is very common in trading of NPLs with very aged past due dates, which could outside of the statute of limitations.  And the SOLs are not consistent across the country, as each state has its own period.  Most troublesome is that most state's SOLs, if not all, are based on caselaw rather than baked into the state code so it's not a simple Google search to find out.  Even worse is the SOL often changes with newer decisions so the precedent changes sometimes changes every few years.  That's why it's good to have a Rolodex of reliable Attorneys in each state that are proficient in creditor rights.  Having said that, sometimes you can even get conflicting opinions between lawyers.  This is another thing that the gurus rarely teach as most have never likely been in the situation.  SOLs  is probably the biggest risk in investing in NPLs.  And don't even get me started on Laches as a defense by a savvy borrower's attorney......

ya for full time note investors I suspect this is common knowldge like running title or getting title insurance on a DIL.. but it was new one on me. :)

[Chad U.]

Quote from @Jay Hinrichs:

Quote from @Chad U.:

Quote from @Jay Hinrichs:

Quote from @Chad U.:

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

Oh, why didn't you start off with "we've been buying NPLs since 2010" and begin each and every post with that? Lol (inside joke)

I love the deficiency judgment play, especially for the rent skimmers who have multiple properties!  

Here's another tip for all those out there that gurus don't teach you.  Never release or satisfy a mortgage that you think is worthless or uncollectible.  I just got an email yesterday from a real estate broker looking for a release on a property under contract on behalf of the borrower.  We had charged it off a couple years ago, but never released it.   My response, sure thing, we can release it for a reduced payoff. 

Mind you, there are some states, specifically NY where you could be on the hook for code issues on vacant properties, even if you are just the lender, so best to do your homework on each state. 

one other tid bit if you own a note and payments stop and you dont start foreclosure in  a certain amount of time ( typically a few years) the mortgage is now unenforceable.. I have bought a few properties from owners whose mortgage was striken off .. because the lender failed to foreclose.. these were in Washington state.. Now i cant see note investors not starting the action but I can sure see banks doing that then selling a note to some nub who does not know this.. Chad you ever seen this ? or heard of it.. was a new one to me.. what I love about our game of RE is no one knows everything and you learn new stuff every week.

Yes this is very common in trading of NPLs with very aged past due dates, which could outside of the statute of limitations.  And the SOLs are not consistent across the country, as each state has its own period.  Most troublesome is that most state's SOLs, if not all, are based on caselaw rather than baked into the state code so it's not a simple Google search to find out.  Even worse is the SOL often changes with newer decisions so the precedent changes sometimes changes every few years.  That's why it's good to have a Rolodex of reliable Attorneys in each state that are proficient in creditor rights.  Having said that, sometimes you can even get conflicting opinions between lawyers.  This is another thing that the gurus rarely teach as most have never likely been in the situation.  SOLs  is probably the biggest risk in investing in NPLs.  And don't even get me started on Laches as a defense by a savvy borrower's attorney......

ya for full time note investors I suspect this is common knowldge like running title or getting title insurance on a DIL.. but it was new one on me. :)

Yep I'm still learning something everyday as well, especially in this biz. One thing I forgot to mention, typically there is a separate SOL on the note vs the mortgage with the note having a shorter period.  Most note investors are aware of SOLs but believe the shorter note SOL applied for both (myself included at one time). Many just think the loan is a write off at that point.. The difference is when a SOL expires on the note, you can no longer pursue the borrower to collect on it nor get a deficiency judgment, however may be still be able to file for an In Rem foreclosure against the property.  As I said, this varies from state to state. 

[Chris Seveney]

Quote from @Chad U.:

Quote from @Jay Hinrichs:

Quote from @Chad U.:

Quote from @Jay Hinrichs:

Quote from @Chad U.:

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

Oh, why didn't you start off with "we've been buying NPLs since 2010" and begin each and every post with that? Lol (inside joke)

I love the deficiency judgment play, especially for the rent skimmers who have multiple properties!  

Here's another tip for all those out there that gurus don't teach you.  Never release or satisfy a mortgage that you think is worthless or uncollectible.  I just got an email yesterday from a real estate broker looking for a release on a property under contract on behalf of the borrower.  We had charged it off a couple years ago, but never released it.   My response, sure thing, we can release it for a reduced payoff. 

Mind you, there are some states, specifically NY where you could be on the hook for code issues on vacant properties, even if you are just the lender, so best to do your homework on each state. 

one other tid bit if you own a note and payments stop and you dont start foreclosure in  a certain amount of time ( typically a few years) the mortgage is now unenforceable.. I have bought a few properties from owners whose mortgage was striken off .. because the lender failed to foreclose.. these were in Washington state.. Now i cant see note investors not starting the action but I can sure see banks doing that then selling a note to some nub who does not know this.. Chad you ever seen this ? or heard of it.. was a new one to me.. what I love about our game of RE is no one knows everything and you learn new stuff every week.

Yes this is very common in trading of NPLs with very aged past due dates, which could outside of the statute of limitations.  And the SOLs are not consistent across the country, as each state has its own period.  Most troublesome is that most state's SOLs, if not all, are based on caselaw rather than baked into the state code so it's not a simple Google search to find out.  Even worse is the SOL often changes with newer decisions so the precedent changes sometimes changes every few years.  That's why it's good to have a Rolodex of reliable Attorneys in each state that are proficient in creditor rights.  Having said that, sometimes you can even get conflicting opinions between lawyers.  This is another thing that the gurus rarely teach as most have never likely been in the situation.  SOLs  is probably the biggest risk in investing in NPLs.  And don't even get me started on Laches as a defense by a savvy borrower's attorney......

ya for full time note investors I suspect this is common knowldge like running title or getting title insurance on a DIL.. but it was new one on me. :)

Yep I'm still learning something everyday as well, especially in this biz. One thing I forgot to mention, typically there is a separate SOL on the note vs the mortgage with the note having a shorter period.  Most note investors are aware of SOLs but believe the shorter note SOL applied for both (myself included at one time). Many just think the loan is a write off at that point.. The difference is when a SOL expires on the note, you can no longer pursue the borrower to collect on it nor get a deficiency judgment, however may be still be able to file for an In Rem foreclosure against the property.  As I said, this varies from state to state. 

 I have one in georgia that i will use as another "case study" as yeah we had SOL issues there. 

Also in some states you can accept a payment (like PA) after demand and complaint and others like ohio you cannot.

[Edward Condon]

@Chris Seveney
It is impossible to pay too much attention to Dr. 7E's posts!

[Peter Walther]

Quote from @Jay Hinrichs:

Quote from @Chad U.:

Quote from @Chris Seveney:

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

Oh, why didn't you start off with "we've been buying NPLs since 2010" and begin each and every post with that? Lol (inside joke)

I love the deficiency judgment play, especially for the rent skimmers who have multiple properties!  

Here's another tip for all those out there that gurus don't teach you.  Never release or satisfy a mortgage that you think is worthless or uncollectible.  I just got an email yesterday from a real estate broker looking for a release on a property under contract on behalf of the borrower.  We had charged it off a couple years ago, but never released it.   My response, sure thing, we can release it for a reduced payoff. 

Mind you, there are some states, specifically NY where you could be on the hook for code issues on vacant properties, even if you are just the lender, so best to do your homework on each state. 

one other tid bit if you own a note and payments stop and you dont start foreclosure in  a certain amount of time ( typically a few years) the mortgage is now unenforceable.. I have bought a few properties from owners whose mortgage was striken off .. because the lender failed to foreclose.. these were in Washington state.. Now i cant see note investors not starting the action but I can sure see banks doing that then selling a note to some nub who does not know this.. Chad you ever seen this ? or heard of it.. was a new one to me.. what I love about our game of RE is no one knows everything and you learn new stuff every week.

 In my experience, many states view each failure to make a payment a unique default subject to its own running of the SOL.  So if a loan has been in default for ten years, the earliest four may be uncollectable but the later six and the remaining balance are.  The problem lenders get themselves into is when they accelerate the debt, then all payments are due and payable and are subject to the same SOL.  I had a claim in NY where a prior lender had accelerated a debt and filed foreclosure.  The borrower worked out a deal and brought the loan current and the foreclosure was dismissed.  At the time, NY required an affirmative act to revoke the acceleration which wasn't done.  I came into the picture when an agent issued a new loan title policy w/o obtaining a release of the prior mtg.  After some litigation the court rule the SOL had run on the prior mtg and my insured's lien was as insured.

[Chris Seveney]

@Peter Walther

It’s gotten quirky - like in GA if they don’t pay for so many years then it’s wiped (had that happen but thankfully we got them to mod and reinstate the SOL).

[Peter Walther]

Quote from @Chris Seveney:

@Peter Walther

It’s gotten quirky - like in GA if they don’t pay for so many years then it’s wiped (had that happen but thankfully we got them to mod and reinstate the SOL).

 @Chris Seveney And a moving target.  I believe after I resolved my claim the law in NY was changed making the revocation automatic with the dismissal of the foreclosure.

[Marco Bario]

@Chris Seveney

"After around 2 years of payments we sold the loan and went from a loss to a very nice gain."

I know this one... and it's still paying every month on the first of the month. 

[Chris Seveney]

Quote from @Marco Bario:

@Chris Seveney

"After around 2 years of payments we sold the loan and went from a loss to a very nice gain."

I know this one... and it's still paying every month on the first of the month. 

 And I bet whoever bought it :)  - enjoys the cashflow.