All Forum Posts by: Dion DePaoli

FCI makes no Warranty, that I know of, as to soundness of chain of ownership for an asset they list on their site. You should always care. This file could have just as easily had dual interested parties. Not uncommon in some of the institutional notes they market which were subject to being used as collateral for other financing.

Broken chains are not uncommon but as stated above understanding how it all works resolves the workload. Chains which can not be cured by either of the two methods above are fairly uncommon. The amount of work to cure would be the defining difference.

You can ask for a title insurance company to insure your priority, you can also carry two spare tires in your care. Not going to hurt you per se, will cost you and may be unessicary from a cost perspective.

I see, so it's not that you sent in too many, it is that you were concerned about priority. Note AOM's do not have a priority function like the actual security instrument.

Some general ideas for the readers. An Assignment (AOM) is not the same as a Security Instrument (Mortgage/DOT) in body of law. In most cases, ownership is perfected upon actual possession of the instrument (Promissory Note in our case). Priority of ownership of the same instrument is established upon possession, sometimes referred to as Automatic (what happens at point of sale). Once you hold the actual promissory note, you "Automatically" have priority to all other claims. Ergo, priority by possession.

Note, point of sale happens when both sides deliver their perspective item. Funds or file.

The recording, sometimes referred to as Filing as contrast to Automatic, on an AOM helps to defend against other 'potential or previous' Assignees claims to the instrument. However, we still can fall back on possession as giving priority. And in most cases, that is where the argument ends. Even if you have an AOM recorded before me giving you priority in Filing, I have Automatic priority by possession and trump your claim.

And if that wasn't confusing for the kids at home. To say it another way, there 'can' be a total to two pieces which affect ownership and priority. Having actual possession of the note is the piece with the most power. This is what makes Lost Notes briefly concerning, amongst some other ideas. Just because you have an assignment does not necessarily mean you have priority in rights. With an assignment in addition to possession, you sit with both pieces in a strong place that can survive most (if not all [I don't know of any]) challenges.

None of that is an effort to say, do not worry about intervening assignments. Since a True Sale can be treated differently than a mere Assignment for Security (like if I used the note as collateral for other financing), they do both bare importance.

That said, what this does do is help keep our heads straight when it comes to time to cure any intervening assignment. Recording several intervening assignments at the same time is less of a worry if you have possession. This is important to understand, because if you happen to purchase a loan with some broken chains of assignments or perhaps assignments held in file not of record, while it is important to always be systematic when possible, sometimes that may be impossible. Where AOM 1 is of record, AOM 2 is in file and AOM 3 is of record. You will not go back and do any type of correcting for AOM 2 to be before AOM 3. Generally speaking, there should be no need. As such, we can apply the same idea to pulling your hair out over priority of filing like in the case above. Even if the clerk recorded #2 AOM before AOM #1, it would have meant much, provided the note was held in possession.

In the event you actually did need to establish this, you would simply note on the assignment itself the desired affects of the instrument. This takes the priority given explicitly by the recorder's time stamp to be that of what is contained in the instrument while perfecting the same.

Patrick, have you experienced this, where you send your AOM plus an additional intervening assignment and they did not record it under the idea that you sent in too many?

Did you send in the proper amount of fees with them?

What did they do, if this did happen to you?

Yea, I have not experienced this type of pseudo hostage negotiation for a trustee fee. I have had some similar events with Receivers not BK Trustee. The core issue there for me is the fee is not net of sale but on top of sale. Clearly that creates an additional liability which can kill a fair amount of deals for many primary residence buyers. I don't have an issue with the guy collecting a fee, I have issue with the guy "adding" a fee.

The whole out of state disclosure form doesn't help the cause believing this guy knows what he is doing. Let's not forget the limiting of counter-party capable of buying the property. That said, in the universe I live, stupid things can happen everywhere. If this were my loan and I learned of these things, which clearly create barriers to settling a transaction, I would look into a complaint. Unfortunately, if this runs the same river as Recievers in general, that is an uphill battle as well.

If there is no legal action in the file, they can simply hold the AOM in file. Not uncommon in history, less common in recent practice. Not a favorite practice for me to see but not a deal breaker. The rights were passed at the point of sale. As long as they have an original to record, not too much to make a fuss about, just condition the contract for it to be recorded.

Not much in terms of detail here. I think you mean forward funds recovered or due and not you try and take funds not claimed.

To find folks that are hard to find, search for "skip tracing".

In addition, most states of a lost or unclaimed property laws that needs to be adhered to. These same programs are where the electric company would post any refunds they processed that didn't get delivered to the client, perhaps because they moved, etc. Search the state website for such where the property is located.

*Property meaning all forms of property, not just real property (real estate).

Sorry, after I posted, I reread your post and to make sure we are working with the same idea. Who are the parties in the option contract? The Seller and you or you and a tenant?

The option contract does not give you the full bundle of rights in title to the real property until you exercise the option and become the formal owner in title.

Without your name on title you will not be able to find a lender willing to finance you since your interests are inferior to the those granted to you by the [still] owner of the property.

I am guessing there is also a clause in your option contract with prevents you from encumbering the property or mandating you cure immediately any encumbrance caused by you or be in breach of contract.

You "might" be able to sell the option contract for the cash flow to another investor but I can't imagine that will net you enough money to do much with in terms of purchasing another property.

That unfortunately, is not correct.

Unpaid [Principal] Balance is the amount of principal remaining in the loan. While missing a payment will cause the principal to not be reduced, it has nothing to do with missed payments per se.

Interest arrears is the cumulative amount of interest due under the terms of the note that have not been paid. It is not added into the principal balance unless the loan is formally modified.

Generally speaking, folks do not pay the balance down prior to foreclosure. That idea could give way to a reinstatement of the mortgage, depending on the amounts due to cure. It is also sort of silly. The borrower is about to loose all interests in the house, any monies paid to the mortgage are wasted unless the mortgagee is willing to take less than what is due to reinstate or satisfy the mortgage.

When a property is foreclosed, there is no longer an unpaid balance (subject to the redemption period). The mortgage is extinguished and the asset is sent to auction to convert the mortgage (or deed of trust) interests into either cash, by way of real property sale, or equity, by way of reverting back to the lender who takes title.

If the OP is looking at a foreclosured property, the unpaid balance has no real bearing any longer. Unless there is a post sale redemption period. In those states, the unpaid balance plus all interest arrears and advances and fees would sum to the amount due to payoff the debt. That is the "Payoff". By paying the debt, they redeem their interests in the real property, removing the interests of the mortgagee.

Patrick, the second posting makes this sound a little more like this property is possibly a Short Sale. In a short sale the unpaid balance would still be present, since the property has not formally been foreclosed.

In that idea, sometimes we misuse the word foreclosure to mean "in foreclosure process". The balance only serves as a benchmark to quantify (usually in vein) the amount that is due in order to remove the interests of the mortgagee.

If you are buying a property with a mortgage, if the sale price is less than the amount due under the mortgage, then the mortgagee has an option to take less than what is due or not. That is a "Short" and is why the sale is called a "Short Sale".

I see I repeated some of what Wayne said already.

Equity is not cash. Equity is convertible into cash (or other assets) but is not cash in and of itself.

To say it another way, equity is the net of the liabilities and assets. The term gives an understanding of the priority of the interests held. The definition works the same way in stocks as it does real property. Quantifying the net interests of the holder from the asset's liabilities.