Nuts and Bolts of turning Collection into Judgment on Bad 2nd TD

Tax Liens & Mortgage Notes
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Nuts and Bolts of turning Collection into Judgment on Bad 2nd TD

David Doyle
Investor · Monrovia, CA · Member since 2012 · 219 posts · 79 votes

I have a colleague I've known many years who has a number of defaulted California 2nd trust deeds 

Fact is they were cash out 2nd mortgages on investment properties,,they turned into bad deals ,borrowers went thru foreclosure but have not declared Bankruptcy.These are California properties .Some of the Notes are 9 years old
I have been pursuing Judgment Enforcement for the last 6 months with moderate success
In a word ,Id like to help my friend collect on these 2nds that went South
Its my understanding I can pursue them as a collection and if that fails ,hire an attorney and create a deficiency judgment ,
At that point I can request an Assignment of Judgment,represent myself in court and collect on the debt
Is that accurate? 

If anyone on the forum has done this or know the procedure I'd like to talk.
This is a "new breed of cat " for me so any help appreciated

Thanks

D Doyle

Los Angeles

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Rich Baer
Real Estate Investment Attorney · Kingsville, MD · Member since 2016 · 643 posts · 408 votes
10y

@Jay Hinrichs

      They all payoff at some point. Some are the only lien on the property. I have one where the house is worth $150,000. No mortgage. I bought the $20,000 medical judgment from a Hospital at a discount. It is earning 10%. When the owner sells or refi's I get paid. Pretty simple really. It takes time for me to find worthy judgments but it is a small niche that has little or no competition.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y
    Make sure you sit down with a Caly RE attorney first. Each state has a max period to seek a deficiency judgment.
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    the 10 year time period in my understanding is for perfected judgments..

    Not sure about notes that are dormant that long.

    ONe of my old RE colleagues actually has a company that does this.

    but they buy credit card judgments.. IE credit card company already has the judgment.

    they do exactly what your talking about.

    they wait about 9.5 years.... by then the debtor figures that debt is long gone. and if they have not filed BK these guys move in and file their garnishment and clean out their accounts.. they have very sophisticated tracking programs etc... debtor gets the shock of their life..

    they will usually also negotiate and give back some money so they don't end up on the street but they get a payment plan out of them with some money down.

    they buy this debt for 5 cents on the dollar generally.. which of course is what you need to pay if your waiting that long and going through the collection efforts

    I am not sure on the RE notes.. I would think you need to get a judgement filed through a default action but I could be wrong. .as I have only been a first position lender all these years.

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  • Rich Baer
    Real Estate Investment Attorney · Kingsville, MD · Member since 2016 · 643 posts · 408 votes
    10y

    @David Doyle @Wayne Brooks @Jay Hinrichs

           I actually have purchased a number of Judgments in Baltimore that are secured by the owner's property and are first or second liens on the property. I only buy them when there is plenty of equity in the property. I don't actively pursue collection on them. I receive 10% statutory interest on them and treat them like CD's. I get paid when the owner sells or refinances. I have sold some over the years to other investors so if anyone has an interest in them to collect or let ride (they can be renewed anytime and are good for 12 years) feel free to contact me.

        Rich Baer, Esq.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Rich Baer  how many never payoff.. ?  kind of like tax liens in some states.. but many tax liens never pay off and you just never get paid back.

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  • Rich Baer
    Real Estate Investment Attorney · Kingsville, MD · Member since 2016 · 643 posts · 408 votes
    10y

    @Jay Hinrichs

          They all payoff at some point. Some are the only lien on the property. I have one where the house is worth $150,000. No mortgage. I bought the $20,000 medical judgment from a Hospital at a discount. It is earning 10%. When the owner sells or refi's I get paid. Pretty simple really. It takes time for me to find worthy judgments but it is a small niche that has little or no competition.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Rich Baer  nice niche.. like you said like a CD...

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