All Forum Posts by: Dion DePaoli

@Jay Hinrichs

That would be cool but I am inclined to think the matches would be difficult.  Nobody likes to be told what they can and cannot do.

@Bob Malecki

What are you specifically looking to accomplish?   

A platform to perform workouts would have to be a licensed servicer or the owner of the loan due to licensing and you have to be careful about automation on these matters if that is a background thought - ie - robosigning issue.

Assign tasks to do what?  Same issue as above.  Licensure and ownership and knowledge of loan affidavits.

Tax tracking is a service that most servicers offer for $5 per loan.  You can independently contract a couple vendors as well.  

Who is the discussion with?  Internal - any database would work.  Servicer - this would have to be driven by the servicer, I don't know of any who will log into your proprietary system.

To a large extent, which I am sure most of you folks won't like my answer, you are attempting to reinvent wheels that already exist for a long, long time.  All these things you are looking for comes with a good servicing platform.  If you are doing the DIY servicing, that is probably your issue and I don't know of a way to duct tape and bubble gum the two worlds together.  Outside vendors like attorneys and such are probably not going to be willing to log into a one off system provided by you.  
In my experience I have seen attempts at in-house systems and they have a very high failure rate.  That is also why there is a very little by way of program vendors in this space, there is no money in it or the cost to the customer is very large since the market space is small.  (SDXS was originally getting into this space - they we just went back to asset management)  So be careful if you choose some industry specific program as that company may not be here in a couple months.  Further, you end up having to manage a system separate from servicing in order to manage your loans.  Thus you end up worry about the wrong thing.  My best advice is to find a servicing solution that accommodates the reporting and task assignments you desire and use that.  I have managed a couple thousand loans using servicing reports and excel.  We once used an MS Access database but that feel to the wayside and we went back to Excel.  Like I said, pretty sure most of you won't like my comments here, sorry.

Responding to @Wayne Brooks's ping.

Use the fax number or email you have and type of a letter to include with the Sheriff's Deed requesting a payoff for the senior lien.  They have a maximum of 30 days to respond.  If they fail to respond file a complaint with the Consumer Financial Protection Bureau.  Call and make sure the fax or email is received and keep record of time sent and confirmation of receipt.  

Calling into the servicer typically leads to headaches and often times you will end up on the phone with someone less familiar with the legality of your request.  So as far as they understand it, even though it is grossly incorrect, you don't have a right to that information.  However, legally any party with an interest in the property, which yours is by way of Sheriff Deed, has a right to redeem the property from any liens.  That is different and separate from inquiring into the borrower's account.  

Legally they have to issue a formal written payoff statement which includes the payoff amount through any requested date usually 30 days out.  (they will typically give a per diem interest to use to calculate to payoff date requested.  It can not just be verbal.  Like I said, your request needs to be formal as well, not just a phone call.  

If they fail to comply the CFPB will follow up with them and you shouldn't need an attorney.  

Reality is most NPLs you purchase will end in foreclosure.  Reinstatement of defaulted loans tends to be over hyped.  There are opportunities to reinstate some loans but a newbie should be careful when putting too much reliance on reinstatement.  It will lead to reinstatement of bad loans which will only cost more money.

Reinstatement is less of a process and more of a decision.  While there is paperwork to be filled out and turned in by the borrower the mortgagee holds the power to decide to reinstate or not.  

 "Dion DePaoli" - d to the g to the d.  

If you don't like the service from FCI there are other servicers.  Full service servicing does indeed track and follow up on taxes and insurance.  

An insurance vendor can't collect or service a loan without proper license.  They merely sell you insurance.

A divorce wouldn't trigger DOS.

If you are a borrower on the loan and signed the note as mentioned above chances are the bank will not release you.  It is their option not your ex-husband's.  If you simply signed the mortgage then you have already removed your interest from the property by executing and recording a Quit Claim Deed.  Removing yourself from title doesn't remove your obligations under the note.  Unless he was specifically order by the divorce degree to refinance the loan then there probably isn't much you can do.  Chat with your divorce attorney about remedies in your jurisdiction.

Bankruptcy is not something you should be speculating with. Lender Placed Insurance communication is not something that you should be trying to DIY. You may have already overstepped your bounds and violated BK collections laws.

If the BK 7 discharged the loan then the entire obligation is removed from the borrower. This will include any obligations to advances made under the same note that was discharged. The security instrument still allows you to obtain LPI and that LPI can increase the amounts due paid out to release the lien. However, you can not try and collect those amounts from the borrower. If the BK was a 13 then you would have a better argument regarding post petition fees and advances since the future obligation remains but not so much with a BK 7. So the statement you made to the borrower that the LPI will be at her expense is false and if you press too hard and she turns to her BK attorney about it you could find yourself in hot water.  The phone call itself and any similar demand language in your letter would also be violations.

As far as contact goes, you can not contact the borrower for any portion of the debt or terms of debt which were discharged by the BK plan. Forever. It is gone. Doesn't exist anymore. Any attempt to contact the borrower for that debt obligation or terms under it are a violation of BK laws. If your debt was not discharged by the BK then collections on those obligations can continue as normal once the BK is finalized by discharge. A borrower is responsible for debts after their bankruptcy petition and for debts not included in bankruptcy. It's not clear how your loan was affected here.  You do not need to correspond with the BK attorney for any post petition obligations those are the responsibility of the borrower.  During the stay and after the discharge your only point of contact is the BK attorney but they probably won't be much help post discharge - there is nothing to talk about.  

If the BK discharged your loan and a modification was executed post BK discharge then the borrower per that modification agreement should have re-binded the borrower to the obligations under the note. I would look to the modification agreement and ensure it spells out obligations specifically and would cross check any references made back to the note if the note was discharged to ensure that obligation can with stand legal scrutiny and would not be a violation of BK laws. So a clause that says something to the tune of "..all other obligations under the note remain in affect." or something like that may not fly. That note's obligations are discharged and a reference to them may not be enforceable.

If the modification was executed prior to the BK petition then it would fall under the umbrella of the BK. It would have been claimed as a debt and discharged if claimed. So you should look into when that modification actually took place.

LPI falls under terms within Regulation X which was amended in 2014 under Dodd Frank. You are required to send no less than two notices. You are required to specifically quote the cost or a reasonable estimate. You are required to give at least 45 days to cure. You are obligated to inform the borrower LPI may not insure the borrower against loss. The text and font must be legible and certain verbiage needs to be in bold print. You may not send one letter alluding to LPI and then a phone call to the borrower and expect to include any amounts of LPI in the amount due under the loan.

Some post petition LPI letters have specific language which spells out the borrower's liability potential and that the lender's policy will not cover that liability. If a person is hurt on the property the borrower will still be liable even though the loan is discharged. While they own the property they still have those risks of being an owner of real property. Those letters will have amended language which deals with the cost being added to the amounts due but the correspondence is NOT an attempt to collect on any debt.

For the sake of mentioning it, if the borrower's loan was discharged then attempts to obtain a prepayment are also a violation of BK laws. You can not make any type of call regarding the discharged obligation at all, whatsoever.

These are the issues with DIY servicing. Newbies be warned.

Those are certainly items that need to be present to conduct due diligence.  That said, they are not the only item and typically due diligence is conducted for the entire file not just certain pieces of the file.  So a buyer should request all of the file and data which would include the note and any modification agreement.  

Yes, any note and modification of said note are definitive sources of information for the loan.  As I mentioned above, they are not the only sources of information.  Accounting of the loan and escrow will matter.  Any informal repayment plans or forbearance are also important which may only be documented in the servicing notes of the loan.  Diligence is conducted on the entire note file and data not just portions, as I mentioned earlier. 

In regards to a standard practice, it depends on the loan and what is happening with it.  That will be the leading cause for certain things to be reviewed and not.  For instance, a loan not in default doesn't need to include proper notices and any foreclosure filings.  There is no quick and easy simple checklist for note due diligence.  

Newbies will be good at due diligence as a function of ownership and disposition of the loan not a checklist.  It is the ownership and struggles to disposition the loan which will improve a newbies capacity for due diligence.  This obviously can also mean a higher risk of loss due to a lack of knowledge and understanding.  In that sense, it can be an expensive lesson.  There are some firms which will conduct due diligence for investors in the market place.  Though some investors choose to go it alone which I don't personally recommend.  

Happy New Year.

Ethan,

Any loan data at large can have data integrity issues.  There are numerous reasons for this including input error, seller misunderstandings all the way down to malicious intent.  

In this particular case I would venture to say the Seller has errored with input data.  The First Payment Date would not be 10 years after the loan was made.  The Next Payment Due being October 2016 makes the loan 60 days past due.  Delinquent not defaulted.  These would seem to be user input error/misunderstandings.

The balance increase would be from a modification.  A balance can only increase if the loan is negative amortizing or open ended or modified.  Neither of those other ideas seem to be present.  Further, the First Payment Date of Oct 2015 is 30 years from the Maturity Date.  A loan made in 2005 in second position would not likely have a 40 year term.  

The due day of the month also is scrambled around.  Generally the day of the month stays fairly static throughout the loan from both the origination and any modification.  Payments due on the 5th are always due on the 5th.  Payments due on the 20th are always due on the 20th.  Payment due days can be adjusted informally but unless the note is formally amended what is in the note prevails in terms of enforcement. 

It is possible to make 12 consecutive payments and still have a loan which is in default.  It all depends on when the payments made in the consecutive string was due.  If it was due for 2015 then 12 payments might just bring the loan due date into the 2016's.  

The down payment, if it is truly a down payment, would have been made at the time of origination and has already been collected by the original lender.  If that payment was for a modification, then it was made at the time modification was made.  Both scenarios are fairly meaningless now except for the theorized equity that should be present.

The loan is defined as a step up loan. The rate will increase at certain times over the course of the term. The problem is the rate increase being described is 100% increase going from currently 4% to 8% in 2020. Not really a positive. Since we presume the loan is modified, as it looks to have been, the modification would have required the Mortgagee to consider the borrower's ability to repay that step up by considering the DTI on the highest payment possible based on their income now. I would guess it fails that test, but that is just a guess.

For these reasons plus many more is why a buyer should ensure they have proper time and knowledge to perform due diligence.  Stay inquisitive.  Keep learning.