All Forum Posts by: Dion DePaoli

So I have a pesky keyword alert that will not go away. The keyword was in a thread that was removed by admin. So I guess since I can't click on the thread, since when I click on the link it shows the green line saying it was moved/closed and can't be accessed I don't actually satisfy the idea of seeing the keyword post which eliminates the keyword alert.

...and now you know.

Sorry about the spelling errors, coffee must have inhibited my eyes from reading what I was typing while also making me type faster. The spelling corrections you made/assume are correct.

Millage Rate is applied to Taxable Value to produce the amount of taxes due.

Taxable Value can differ from Assessed Value based on caps applied to value increases. In other words, the Assessed Value can be $100 but the Tax Value can be $70 because value increase caps (maximums) are applied preventing the Taxable Value to be $100, so it get's capped at $70. Without the idea of the cap to increases, the numbers would be the same and there would be no need for different terminology. Another way to look at it is the Taxable Value is personal to the owner and the Assessed Value is to the public since certain actions can be taken by owners (like Homesteading) which create the cap on the Taxable Value. I believe the most common cap is a tax increase cap in many states of about 3%.

If you look up your county you likely have some type of board with a name similar to Board of Equalization. Essentially the folks who review the rolls of the county. I just looked it up for you HERE

Here is your states guidance on the process and the laws that govern it for all the counties UTAH Publication on Equalization

I am not familiar with the podcast. What you describe sounds like what I would assume he is trying to do. Since the process of equalization is to create 'fair' taxation based on the assets you could use it to reverse engineer the Fair Market Value they used.

That said, certainly the time which the FMV is actually relevant to the market will matter. So, where ER is 90%, you could use the Assessed Value to find the FMV they equalized to. However, if the review is old, they will not be so accurate. Remember that most of the time these analytics are in the past to begin with. In addition, the overall percent is not an asset level percent; it is the entire group the average (likely weighted). So an ER is X% but the particular asset can be plus or minus that. Essentially, I am saying it's a bunch of brain damage to have a "potential" value which frankly might not be so accurate based on time. It will put you in the ballpark, but so will Zillow if you know how to look at comps and derive a basic value from the data.

An Assessed Value is usually available in public record. Many folks try and use these numbers as evidence of FMV but they are not going to be as accurate as a formal appraisal or even a CMA or BPO. However, if you had a ER and the data is received with Assessed Value you could do some quick calculations to get in the ballpark on a global scale opposed to looking up individual properties.

To that degree, other asset classes do similar types of quick calculations to make sense out of the data. For instance in loans, we commonly use the a mix of the HPI and the Origination Date to determine how accurate a Seller's property value might be where we quickly calculate how much deprecation occurred in the market and see if it is close to the Seller delivered value.

For that type of information, this process would be valuable since data sets can be so large and you want to cut down into assets that matter rather quickly. I personally would not use any method like that as a final determination of value but as a cursury value it can be useful.

Not a lawyer and really only sharing my opinion.

This doesn't sound like a good idea. The easiest problem to see is how will you control if a poster even has a viable interest? Seems like an administrative nightmare at best.

Also, you are trying to earn a success based fee for a sale between two parties. That screams license (real estate) requirement in my mind.

See what @Bill Gulley thinks.

The Equalized Rate is a ratio expressed as a percent of how accurate the Tax Accessed Property Value is to the actual True Market Value.

ER = [Accessed Value] \ [Market Value]
ER = 70,000 / 100,000

An Equalized Value is more like the Accessed Property Value, commonly refereed to as a 'Tentative Equalized Value'.

Not to be confused with Taxable Value, which is the value in concert with the mileage rate to figure out the amount due for property taxes.

Taxable Value has a cap depending on the state of how much the taxable value can increase based on occupancy. When a home is homesteaded the cap of taxable value increase kicks in. So the Taxable Value can go from $100 to $103 but the Accessed Value or Tentative Equalized Value will be more like $110 in an appreciating market or with adequate repairs, etc.

Equalizing is the process of approving the Assessment Value rolls for the property within the jurisdiction.

If you were to use the EV (or TEV) then you would really need to know the Equalization Rate. Since that is what brings you back in ratio to the actual Fair Market Value (True Market Value).

Curious what the context was around using TEV, can you share that?

Cody, welcome to the active role in the BP universe!

The property being schedule for sale is to be expected frankly. You have not made an offer, so the process of foreclosure will continue.

Now, this may require you to have a strong offer with cash and perhaps a quick closing time frame in order to beat the auction deadline. The mortgagee being this close to FCL may not want to cancel or there maybe title issues where they actually need to finish the FCL.

Have you looked at title?

March 10th is not too far away but far enough that you could pull it off but time is fleeting. You really need to know what condition the title is in and if there are other liens that need to be handled. That will give rise to how practical trying to pull this off in such short time might be feasible. Behind that will be the particular mortgagee and servicer with their internal approval systems and if they can move fast enough.

Whether or not you can get the FCL sale to actually cancel is up to the mortgagee and servicer. They will do it for their own reasons. Being this close might be an incentive for them to simply have it finish and deal with you after the auction.

In that event, if you are making a cash offer, you can bid at auction. If it reverts back to them, you may have to wait based on your occupancy intent and depending on who the mortgagee and servicer are in order to buy a NOO property.

There is no permanent exhaustion of all available finance scenarios. Assets can be liquidated to pay for the balloon. Financing can be reconfigured to accommodate for the larger portfolio.

I am not sure that is what you wanted to discuss or not but the answer is pretty straight forward. When you mention you have a financing barrier to getting a new loan, that can be overcome by consolidating the loans you have into one larger commercial loan and then you are repeat the residential buildup. In addition, private capital sources can provide finance that might be easier to qualify for than a bank but you also might have to shop for decent rates.

In addition, not all banks have a residential loan limit. Local and regional banks might be more willing to extend credit to a seasoned and successful local landlord. The loan limit you refer to is more of a secondary market mortgage criteria.

There are many ways to deal with the issue of continued growth. Growing business are growing customers for financial institutions, some programs and terms will change but they will still want you.

I am not sure what any of this has to do with land contracts or subject to transactions though either. If you have a bunch of land contracts, you don' t have mortgages and I don't believe those will be fail the 10 loan rule. In Subject To's, it will depend on how you handle the debt service of the original loan. If you have a wrap, then you have a mortgage or deed of trust, if you have some other structure where a mortgage is not recorded, you may not fail the test either.

Note, those are not suggestions of non-disclosure, those are disclosing and underwriting not treating those assets the same as a mortgage obligation in the underwriting criteria of max loan numbers.

Correct; the sum of the Unpaid Principal Balance, Interest Arrears, Advances (Tax & Insurance and Corporate) and Fees (late) will be the total payoff. You have two of the three major categories.

This is an concerning topic in my opinion. I agree, spending time and money on a potential asset that eventually turns out to be a non-start is a risk that is present in the industry. That said, an easy first wave of mitigating this is to ensure you get some type of feedback from the Seller specific to your concerns. If they don't want to give you relative feedback including some current data that can be used to deduce if the loan is still secured or not then simply walk away and find a different deal. Your seller knew the BK unsecured the debt, they just didn't share it with you. Not a solid business practice IMO.

It is possible on a one by one scenario to look up public record for a property to see what is happening. Title is public record and most counties are on line (not all). Public record will not deliver back BK proceedings though, that is a separate database. I don't know of a way to get that information without paying for it through PACER. Not all that expensive but still has a cost. BTW, a Title Report (usually an owner and encumbrance report) is not a BK report, just because you don't see a BK on title doesn't mean there is not one in BK court.

For us, with any loan, unless we have our minimal set of data, I don't even think twice about trying to do any analysis. In general, we always make assumptions based on what a Seller delivers in terms of data and our offers are subject to due diligence to ensure that data is true and correct. If a Seller is so intent on making all offers final, then we probably just are not good counter-parties for each other. When that happens, we simply walk away.

If Sellers want offers to be final, ensure you have enough of the proper information to deliver such offers. I don't have any issue sleeping at night regarding that idea. It is somewhat like a Seller of real property, clean up the property and disclose known issues and save yourself from time wasting too.

Nationstar is likely the special servicer not the mortgagee. You can look up the mortgagee through public records. That said, you have Nationstar and can work with them in a standard manner to see what you can get done. The advice you gave may need some correcting.

To some degree it seems like the idea of a DPO, which I assume you mean Discounted Pay Off, is being looked to as some alternative. Discounting the total amount due under the note is simply a "Short". If the property needs to convey to a new owner (Developer), then it is a Short Sale. If the property is staying with the current owner, then it is simply a Payoff of the old debt, which is simply Short Pay or if a new mortgage is formed a Short Refinance.

So the idea of the 'cleanest' disposition here is a short sale not purchasing the note to obtain a lieu deed. Pretty straight forward. Purchasing a note does not guarantee the property will be title to the new mortgagee, even if the plan is to pursue a lieu deed. A lieu deed is far from the cleanest nor is it remotely the safest or wisest thing to pursue if the loan has no equity. Take a look at the idea of undue influence. It also ignores the possibility of other creditors charging the transaction as fraud or even a BK trustee conducting a look back and reversing the DIL all together.

There is an idea of what a DIL is in the general public for both investor and non-investor, the idea is understood basically and generally. A DIL is when a property owner gives title to the property as satisfaction for the debt lien against the property. However, usually the knowledge of most folks ends right there and there is a bit more to the whole picture than it being just that simple frankly. DIL's can quickly become your worst nightmare if left to the layman and their limited scope of understanding of the rest of the picture. Pre-event actions matter. Equity matters. Communications matter. DIL is not as DYI as many think.

Plainly stated, go back and advise your Developer to make a short sale offer and forget about the note purchase. I don't see why you need the note transaction here frankly.

@David L. , I admit upfront, I do not fully understand your intentions based on your post but I can only assume that somehow the post you have seems to suggest that you would want to purchase your own loan. Sure, so would the rest of the world. I have good news for that idea, you can also simply send the entire payoff to your current Mortgage Servicer and Viola, you paid for your own loan. Now, I am pretty sure the rest of the idea is that some how you would need a discounted purchase price for your loan. Not the first and not the last to desire such things. If you have enough money to buy your loan, simply pay it off. The chances of you being able to purchase your own primary residence loan is very, very low, the chances of you purchasing your loan with a substantial discount is up there with sitting down and having tea with Ben Franklin and Elvis at the same time next Tuesday...zero.

Earnest money is money deposited in a showing of good faith on a contract for purchase and sale of real property. The idea is presented to the Seller of the real property and is purposed with showing or illustrating how strong the intent is as a buyer to meet the demands of the transaction.

Earnest Money and Down Payment requirements for a loan are two different ideas.

Earnest money can be allocated to any use for the specific transaction it is deposited for on behalf of the person who deposited it. Whether that use is for closing costs or down payment requirements or part of the purchase price for a loan makes no difference.

In the event you took deposited 20% in EM and received financing which only required 10% down payment, you would receive money back at closing. That order of events usually doesn't happen all that much but from time to time it does happen.

Typically in the series of events in a RE transaction, a buyer deposits EM and then brings the difference between that sum and the sum needing to fund the closing. The funds needed to fund the closing can consist of the any part of closing costs, purchase price or down payment. That said, if you brought a check for the full cost of the closing, you EM would be fully refunded.

When calculating your cash returns, any monies used to acquire the property would be summed into the cost basis of the asset. Earnest money by definition does not automatically become a portion of your cost basis until it is allocated to pay for the asset in some manner. It can be allocated to pay for down payment to meet loan guidelines or pay for closing costs or paid in full or part of the purchase price.