All Forum Posts by: Dion DePaoli

The son is experience very wishful thinking.

While some reverse mortgages have MIP that does alter the superior interest the mortgage has on the estate. No Mortgagee HAS to take less than the total balance due for satisfaction of a lien unless ordered by court.

You are correct, this is simply a short sale situation. Trying to step into the shoes of a Mortgagee and then into the shoes of the claim department on mortgage insurance is not something most layman can ever do. Claims are not easy to collect on and they are not escape clauses for borrower's to default. Just because a mortgagee makes a claim on THEIR mortgage insurance (not the borrower's) does not negate the ability for the mortgagee to pursue a deficency, which in some cases is required to collect on the MIP.

The borrower has discretion but can not convey clear title. Only the mortgagee can satisfy their lien. They can do that by being paid in full or by their agreed short terms through sale or refinance. This guy is in fairy-tale land.

Originally posted by @Peter Turner:

Jon,

It is a conventional loan that was modified back in 2012 due to financial hardship. I was reviewing modification documents and they are an amendment and supplement to the original note. In such amendment there is nothing that says anything about moving out or renting, so I am assuming I should be good.

But just in case, since I do feel that the less they know the better due to the modification, does the change of insurance alert the lender anyways?

And is there any way you know of to forward the monthly statement without giving the lender a new address?

I am sure many homeowners turned landlord with FHA loans have had to deal with this very same question/concern.

Thanks again

It appears you have an FHA loan against the property. In the paperwork that you executed which will include the trial program and final modification, there is definitely a part where you the borrower affirm or agree to maintain the property as your primary residence. Most of the modifications allowed and carried out for FHA loans are only for primary residence. If you didn't reside in the home as primary residence, you would not receive the modification based occupancy.

Many of those HAMP modifications resulted in credits back to the mortgage servicer and investor. A credit that upon review may be refused if they find the occupancy is no longer primary. The claims are backlog and do not have to be turned in right away post completion. It would not be a far fetch to have a mortgagee be denied their credit for reducing your loan obligation by FHA and then being a little ticked off and triggering due on sale.

The clause will be subtle, it's not some massive paragraph and will say something along the lines as Borrower will use the property as their primary residence or Borrower confirms property is for primary residence use, etc. The key is, it is enough for FHA/HUD to deny the claim put forth for relief of loss for providing you the modification you received.

What you really should do is stop trying to play the shuffle cup game and deal with your mortgagee on that matter so you don't have to worry about these types of things. Contact them and let them know what your plan is. The mortgagee can not indefinitely keep you in your home as a primary residence for extend periods of time, but they can tell you if they believe you affirmed to X months or Y years at the modification. Which is similar to what you do at origination.

The moral of the story here, pick up the phone call your mortgage servicer and talk to them. You have nothing to fear. After 10 years you would be fine to do what ever you want. After less than 2 years of a modification, you may need a couple more months. The term is not more than 2 years, I believe. Better to know and deal with it properly than to create all this other circumvention events which is only really a burden on you.

You can get with a title vendor and look for mortgagee names that look private in nature and try and contact them. You can also go to REI meetings. Fundamentally, finding these is like finding real property deals, you just have to pick some networks and vendors and go at it.

George,

It's not a great idea that all things due diligence for a whole loan transaction can be conveyed in an on-line post. There are too many variables that will come into play upon review of the data and files.

It's not clear by the post what you actually have received nor the level of due diligence you are trying to conduct. If it is preliminary in order to talk to the seller about a purchase price, you can get by with simply the data in the form of schedule or you can also leaf through documents and bid Subject To your full due diligence. The data you will need includes:

1. Original Loan Information (Rate, Loan Amount, Maturity, First Payment Date, etc)
2. Current Loan Account Information (Current Balance, Modified Terms (if present), Last Payment Date, Next Payment Date, Foreclosure Start Date, etc)
3. Subject Property - (the normal stuff, address, value, etc)

I can give you some more highlights, not meant to be exhaustive and you really should find someone who knows what they are looking and to help you since you don't know.

To check the ownership of the asset you will eventually need to order a title report. Verify the assignment and allonge (not recorded) chains and have the Seller cure any breaks.

If the loan has started foreclosure, you will want to review the foreclosure documents.

Servicing information will come from who ever is servicing the loan. Even in default the loan is still supposed to be serviced to maintain continuity of collections. The servicing entity should be able to send you the borrower's account payment history including all sub-account balances like impounds/escrow, T&I advances and corporate advances. Along with that should come a Servicing Correspondence/Call Log and Borrower Correspondence Letters such as payment demand letters and other communications.

You will likely want to check for bankruptcy actions on behalf of the borrower. The servicer or seller may already have an existing file.

Eventually you will need to review the mortgage file itself which should contain at least your Mortgage/DOT (or DOS for GA), Note, Title Policy and allonges. Depending on the date of origination and the origin of the file it may be necessary to obtain a copy of the 1003, TILA and HUD.

That is about as nutshell as I think I can get it. I suppose one idea to bring up, is it is always a good idea to make sure you understand who you are working with and to somehow verify the person owns the asset they are trying to sell to you. As you can see above, the details are many and the process is slightly complicated. Proper time to conduct proper due diligence should ALWAYS be afforded.

Hope that helps. Good luck.

What is the property type?

It sounds like you will likely have to go to a court to get a judgement on him prior to being able to send it to a collection agency. The court is needed to impute the costs and charges on the other guy, you can not simply say he owes something and send him to collections without proof of him actually being obligated to it.

Well, I am hoping I am not one of those guys who likes to hear themselves talk. There are some experienced note folks here on BP. We are around in the forums. BP has a forum called:

Tax Liens, Notes, Paper, & Cash Flows Discussion

This forum has many posts related to note investing. The discussions do get somewhat detailed and those with interests tend to like and enjoy.

Dave from PPR is a member here, he has a good reputation and many folks like his program. Donna Bauer and Scott Carson I am not as familiar but I have looked them up before, I personally would not do any back flips for their material. BP is not big on Guru sales pitches and coaching programs and those types of programs generally do not get too much positive feedback from the members here.

You will need to start being careful with some materiel as material that is now dated can be misleading with the path and stance of current regulations related to loans. Dobb Frank and Safe Act are talk about in BP a fair amount along with other ideas around the acquisition and disposition of the assets.

The universe of note investing is large, the OP filtered that universe to a subset of performing but still is a bit large. If you provide a little more detail around the idea we can fill out a little more of a conversation here and perhaps point you in the direction of some other threads that might be relative.

Getting and working with a mentor when you are a new is just simply a good idea. This is an asset class that you will not know what you don't know and that can be costly.

As you understand them so far, what are your goals, plans and objectives with the asset class? Performing loans.

What type of yield do you think you are looking for from the loan?

How much (in general) do you have to invest into the loan?

Have you thought about geography concentrations or exclusions?

We can see where that all takes us.

@Tricia Haggard

Pacer is a BK file database, you can retrieve all BK files proceedings. You would have to pull the entire file and read through the plan and approval to see if the debtor attempted to strip the loan.

Second lien stripping is a touchy topic and depending on the state, the process and effects are still working themselves out. One argument is that the BK code is not for declaratory judgement of this nature. Another issue, is the lien must be found wholly unsecured, so if any equity can be associated, then the request may not pass.

If the debtor placed stripping language in, they would put it in the plan and the court would have to agree. Depending on where the case is and you are in ownership, the second lien would have had a chance to petition for your debt. If you entered the loan after, you will have to read any amendments to the plan and see if it was approved or denied. If approved and if the plan is dismissed, you loose nothing, if the plan is discharged, you can be unsecured and discharged via the BK.

@Tricia Haggard

I see you are new to BP, welcome. As Bill mentioned, lot's of threads here on DF as well as other topics related to notes, note investing and management.

The simple answer is yes, get your loan to a servicer upon service transfer and stop the self-service stuff. Whether that is FCI or some other servicer, is something you will have to decide on your own but self-servicing is not really a good idea.

Well if you are getting financing to exit the HML, then that lender will get an appraisal. If you purchase one in addition to that, it could be a waste of money (aside from piece of mind) as the bank's appraiser will produce the report and value they find. You could use the Subject To appraisal, if you get one, in the same argument against the bank's appraisal if needed. The two reports should not be that far off depending on how much time passes and the change in suitable comps.

Depending on the time and lender, you will have to supply repairs to that appraiser in order to realize any needed increase in value in short time frames as an underwriting guide to the appriasal.