All Forum Posts by: Dion DePaoli

Increasing the value of the property manually, per se, would work. IF it is PMI and NOT MIP, which is dependent on FHA or not FHA. How the equity is gained is of no consequence to the gain of equity being present.

As Bill mentions, the increase of equity is documented formally through an appraisal on the Subject Property. That said, the appraisal must reflect the equity and not simply be the idea of the owner. All those trials and tribulations with that will apply.

The chances of you removing the mortgage insurance, either as MIP or PMI are slim to none this early in your loan.

One insurance is for FHA loans (MIP) which as of June this year is one of two situations:
(1) Less than or equal to 90% LTV, it is required to hold the MIP for 11 years or to mortgage term, which ever is shorter.
(2) Greater than 90% LTV the MIP can not be removed from the loan or for the first 30 years.

If you have a non FHA loan, then you have PMI.
(1) Then you can ask for the PMI to be canceled when you have earned through payment or appreciation at least 20% equity.
(2) The Mortgagee must cancel the PMI once you have 22% equity.

"Obviously, I am going to attempt to renegotiate the loan amount in the future and get him to settle."

That is a troubling statement. There is no "obvious" reason why you are trying to pay back less than you have borrowed. Any reduction of principal by the Mortgagee will create an income event in your taxes. You received capital and you didn't pay it back, that is not a loan, it is income.

In the post it is not clear why you simply do not sell out right and not mess with any of the creative stuff. Perhaps that is where the 'obvious' lies, you have negative equity. In that case, first line of attack can simply be a short payoff with the Mortgagee, if they agree, which they do not have to. If they agree to short any of the principal, you will have tax impacts as stated above. That would be the cleanest way to handle this and not mess with any of the wrap idea.

Terms of the debt are only found in the Note, there are no debt terms in the Mortgage, Deed of Trust or Security Deed ("security instrument"). The security instrument is evidence of indebtedness not terms of indebtedness. The security instrument is the pledge of the property which secures the Promissory Note. The Promissory Note, like an IOU, holds all the terms of repayment. Selling the property "Subject To", by conveying title to a new person without satisfying the loan, does not remove you as a borrower or remove the obligation established through the security instrument and note. So while you are the borrower, which you will always be the borrower until you either satisfy the loan or the Mortgagee allows you to bring in someone to assume the loan (formally), you can negotiate a modification. A modification is a formal amendment to the terms of the note and does not necessarily change the security instrument per se.

The Seller is currently bound by contract to sell to another party. The speed and terms of that transaction are governed by the contract he has already entered. The title company has no duty to share information with you and it likely falls against their privacy policy. What you can do is go back to the Seller, since he is the principal party and review the current contract with him.

Look to the language in the contract around closing time and any specific performance terms. If the contract closing date has not passed and the terms and conditions of the Buyer are still progressing per contract, there is not much the Seller (you can't do anything) can do nor should you want to. If the Buyer has exceeded the closing date, the Seller may be able to issue time is of the essence, give time to cure and then cancel the contract. If terms required of the Borrower are not being met, such as finance contingencies a similar demand letter can be issued but it get's a little hairy and the Seller should get a lawyer so he is not making demands on something that does not warrant a demand per the contract.

Certainly, if the Seller approaches the Buyer and simply cancels the contract. All is fine. Then once the contract is canceled you can be the primary contract. Until that time, as mentioned, you can make a backup offer but it is only that an offer which backs up the first offer which is already in contract.

Well, in this setting the term 'Hedge Fund' is really being used loosely. Let's just refer to who you seek as a large investor. So we have Private Equity Investors and Institutional Investors. Any investor, can be an investor for you, we presume, you seem to just want them to have a big checkbook.

Investor targets will be more dependent on what type of investment structure is being offered and the asset they invest in. Additionally, how much capital can be put to work within the one agreement between you and the investor. Larger capital investors do not want to trivialize their time with small investments most of the time it is not time efficient.

Would you be willing to share a little more about the structure and flow that you are thinking of offering?

The asset, seems to be newly originated non-agency loans. Fine, but that is pretty broad. What is the collateral property type? Is the borrower an investor as well or are you the investor (or said company) and you need a loan for fix and flip or holds? Are you putting in any equity, if so an idea of how much? What type of return are thinking you can afford to offer to attract the capital?

In your example, all things are appreciating equally, therefore....all things will appreciate equally in your example. Chances are, that will not be the case in reality, not all things appreciate equally.

Perhaps look to tax implications of gain on sale and net rent potential as better barometers for this type of a decision. Investing based on appreciation as a core motive is speculative at best. Appreciation can be taken into consideration but really should not be a the driving force of the metrics.

A delinquent payment report would be a violation of the borrower's privacy. Lis Pendis is of public record, so those are available.

Yes, you are right a viable strategy. VA loans are also assumable. I believe there are some threads here around those matters. I don't know if anyone has broached a thread for a report for such matters. Those are likely going to cost more than a typical public record report from a title company since the data is not public in general and I would think is more institutional in nature. I know of a vendor but I don't think a non instutional investor will get approved to order the report. Others may chime in.

Brian,
With your background, it might be a more productive conversation here to back into what might be attractive to you rather than trying to fish. You have 200k, you are simply not sure of the asset but I am guessing you have notions of investment horizon and return and any other limiting criteria. In addition, how actively do you want to manage the asset or be involved, will help too. Bringing those ideas to light will get you opinions on the sub class of the assets such as residential or commercial along with fix and flip or hold for yield and commentary along with management of the same.

The loan being insured by FHA is not so readily available since the Lender of record is a common Lender such as BOA, Wells, Citi, etc. They are approved to be able to originate a loan that is insurable by FHA. There may be reports that are compiled where someone links FHA loan numbers back to the loan or if the data provider can do a data dump of the database, I don't know of those things to well through the standard REI mediums. Others may.

The 'vintage' of the loan is simply when it was recorded as that is when it was made. So the date of recording is the filter for that.

I am curious why are you looking for these specifically and what are the specific criteria?