All Forum Posts by: Dion DePaoli

@Greg H. the OP can issue a Notice of Default right now.  The time to cure is 20 days.  No need to wait until December at all.  

Don't wait @Jackie Lange, just start moving on the FC. Forget making contact with title companies, agents and other 3rd parties. None of them will help you. (except your own counsel) The idea is simple, you were alienated - title to the real property was conveyed in whole and you were not paid off. Your instrument should carry a due on sale clause that gives you a right to call the whole loan due. The NOD is the first step. You will send the NOD to the subject property which should get the attention of the new homeowners. They will panic and start making calls to the title company, agents and alike. All you want is to be paid off in full. Avoid conversations with 3rd parties. For a brief moment you will be treated as the devil squashing the dream of these homeowners. It just is, what it is.

As the chips fall, you will get paid off.  The owner and lender policy will kick in and pay you off.  The insurance company will then pursue the borrower/seller civilly and investigate the title companies search to see why the lien was missed.  None of that matters to you.  Don't get wrapped up in the drama outside your door.  There will be much.  

It's not your fault.  It's not the new owner's fault.  And that is why we have title insurance.

@Will Barnard hit the highlights.  Ensure the payments and accounting being reported to you are accurate.  The borrower could be in arm's length and that could mean some collusion on accounting - or not.  

I would be a little concerned if the borrower had setup impounds with the seller finance folks.  Impounds are a touchy concept and if it was setup through the seller servicing on the loan, get your intended servicer involved prior to purchase to make sure you don't run into a snag with being able to board it.  Similar to what @Bob Malecki mentioned.

Occupancy - what @Jay Hinrichs was inquiring, would be a concern since the note seller sounds like they have many deals in their portfolio.  Selling property with finance in place to borrowers who use the subject property as a primary residence will quickly become an act requiring a license in all states.  In some states, if the property is purchased as an investment, as opposed to primary, licensure may not be required.  ("may")

@Varinder Kumar - it is a little dreamy to think a note investor pursuing an NPL can have an idea of what modifications to make to an existing note.  The note seller wouldn't have contact, there would likely be no income or asset documents to understand if there is an ability to repay.  An attorney would not typically be involved in a modification since that act would require them to be a licensed RMLO.  

The thing to remember is that math is absolute.  2+2=4.  As long as you can confirm the payments, then the amortization schedule can be formed and followed.

There is no need for an estoppel letter.  The security instrument and note are the contracts to which the borrower is bound.  By way of due diligence on the note seller you are verifying the accounting.  Even if the note seller has a messy book, math is still math.  

@Greg H. - it wouldn't be advisable to reach out to the current owners and try and be friends.  The OP and new owners won't be friends.  The OP is showing up essentially saying - "the house you just purchased, yea, not so much yours..."  That is going to be a shock to the new owners and any finance company they used.  The new owners will likely panic, which would be understandable.  

You want to follow standard procedure.  Obtain counsel.  File foreclosure.  Someone from the title insurer will reach out once the new owner or new lender process the claim.  There is no claim to process unless FC is started since title is not in jeopardy until that time.  

This is not uncommon.  This sort of thing is why owners and lenders get title policies.  

@Wayne Brooks rang...

The borrower (to OP) had a responsibility to ensure all liens and encumbrances that he/she knew of were satisfied from title. He/she warranted title to the new buyer. So she/he agreed to defend the title for the new buyers from claims arising prior to sale - like our subject DOT.

Filing foreclosure here is best bet for now.  This should trigger the current lender and owner's policies to satisfy the OP's lien.  Get an attorney involved to help protect your interest OP but pursue FC first.  Obviously the new owners will be shocked to learn of this action.  They will place some calls to the title company and perhaps their own counsel as well.  The room will likely fill up quickly with legal personal with the title claim present.  They should have to redeem within state statute timelines.  So in Texas this will go quickly.  

More than likely the insurance company will pursue the old borrower civilly for fraud or unjust enrichment once they have redeemed the property from the OP lien.

It does seem like the title company could handle this a little better.  At the least they should go back and check their searches and see if the lien came up.  OP - just re-check your recorded instrument - ensure that you are attached to the property and the legal description matches.  A whole bunch of people are going to go look at this real soon and you want to ensure you are in the position you believe.  Your legal counsel will also check.

The attorney fees you pay for should be recoverable through your foreclosure here.  They are advances you are making in order to collect on the debt the borrower owes you and secured by the subject property.  

OP if you want out of this and would consider selling the lien I would be happy to show you a bid.  Alas, it will be at a discount.  

Good luck.

@Zachary Taylor

In short - No.  You can't pay a mortgage bill with a section 8 coupon.  Not the same type of program.  

They 'may' qualify for some hardship assistance through local or state programs but that will be temporary.  It won't be a permanent supplement to a lack of income to service the mortgage debt.  

Unfortunately, it sounds like they collectively can not afford to keep the property.  They will need to explore alternative solutions to foreclosure like short selling or deed in lieu if possible.  

Don't spend a bunch of time trying to get blood from a rock. 

Never heard of them or did anything with them.  Looks like they are a local Houston, TX company.  Several offerings for local Houston real estate type stuff.  Don't see them located in Georgia.  If it doesn't pass the sniff test, don't force it to work.  Just move on.

NEVER going to happen.

You won't pass counter party approval Eran.  

Been buying from them.  No issues with DD.  Had a slow couple transfers but nothing unmanageable.  

There are issues in all trades from all counter parties.  

Come spend a Saturday getting into the nitty gritty of note investing. Discounted mortgages are an excellent hedge against a frothy stock market.

Dion DePaoli of Secure Debt Exchange Systems will be leading the discussion.  Topics will include loan sourcing, bidding, due diligence, purchasing and management.  

Steve Hodgdon of Modern Asset Management will be showing examples from his own note portfolio which is generating a 15%+ ROI.

The event will include breakout sessions to help expand participants knowledge of the discussed topics.

Come share your experiences and learn from your fellow investors.

This will be a no cost event. If we wind up needing to pay for a meeting room, we'll pass the hat.

Please spread the word and invite others who may be interested in investing in this asset class. 

Link to register:  https://www.meetup.com/Marin-Alt-Investing-in-Out-...

Questions about the event may be posted below.

To address the above ideas:

1.  Quickest way to have borrower refinance and lender's who refiancne
A loan has a maturity date that is the only way to attempt to control the timing of a borrower needing to refinance.  A mortgagee can not otherwise force a borrower to refinance.

2.  There is more to a conventional refinance than simply payment history.  Foreclosure, bankruptcy and other credit will affect the borrower's ability to qualify for other credit, which would probably need to be better than that to which they have in order to incentivise a refinance.  

It would be wise to understand who you extend credit to and their ability to qualify for credit in the future if you plan on being taken out by a refinance event.  Additionally, you are required to abide by Ability To Repay rule.

3.  The clause is Due on Sale.  Not Due on Call.  Get your documents from an attorney in the state the subject property is located.

4.  If the trust owns the real property, yes.  if not, then the trust is acting as a lender.  

It is illegal to attempt to circumvent the borrower's right of redemption and foreclosure process when lending.