All Forum Posts by: Michael S.

I believe they are allowed. The restrictions Texas has on cash-out refinances and HELOCs are for primary residences. Presumably because of the restrictions, it seems many institutions do not have that kind of product available in Texas. From my understanding you have to talk to the right commercial lender in order to get a line of credit secured by a cash-flow property. That said, from my experience I haven't seen any willing to take a 2nd position.

Read more: 

https://www.biggerpockets.com/forums/585/topics/555448-non-owner-occupied-helocs-in-texas

Danielle,

If he can afford the payment or a slightly increased payment he is prime candidate for a loan modification. I would have him reach out to his loan servicer immediately and ask for a Loss Mitigation Application. Getting a complete Application in would put the foreclosure on hold while he is evaluated. 

I don't have a crystal ball, but if you want some backward looking data I can help. I bought a property in 76013 exactly 3 years ago for $140,000. It's probably worth about $160k today. About 14% in 3 years (~4.7% a year). My advice: make sure it cash flows. 

 Joshua, 

I would look at it like this: Imagine you didn't own your Lewisville property. Based on the numbers, would you buy it today solely for the purposes of renting it out? If not, just sell it and deploy the cash in a property that will work better for you. I have 2 properties in the Metroplex and just bought my third but did so out of state. Prices have been going up here (and taxes commensurate to that increase) and as a result cap rates are compressed. I decided I was better off looking elsewhere even if it means taking the plunge to invest outside of my home market. So far its been a good call. 

Mortgage servicers cannot refer a loan to foreclosure until they are 120+ days delinquent. This is part of the CFPB mortgage servicing rules. 

It's unlikely the servicer will ever negotiate with you. Unfortunately, there are so many rules and regulations around disclosure that it's not worth it to them to talk to you even if they could eliminate their foreclosure timeline by entertaining a short sale or settlement. Seeing as the borrower is deceased, the heirs could negotiate this, but the sunk cost and time of locating them only to be in a position to negotiate doesn't seem worth it to me. 

In Florida, HOAs don't wipe out 1st mortgages. They sometimes foreclose in order to gain title and possession so that they can temporarily rent the property, though they have to take it to auction just like any other foreclosure. In this case someone bought it and paid off the HOA judgments. They now have title subject to the 1st mortgage and also would be liable for ongoing HOA payments. Oops!

I am not a lawyer but I managed bankruptcy operations for a servicer when borrowers filed bankruptcy. I think its important to understand what bankruptcy really is as it is often times misunderstood by many including those in the media. Bankruptcy at its most simple is a way for persons (natural persons like you and me but also business entities) to either discharge (basically have forgiven) or reorganize certain debts. In petitioning for bankruptcy relief, the filing entity will have to list assets and liabilities to paint a complete financial picture. Creditors of the filing entity or debtor will file claims representing obligations owed to them by the debtor. In a liquidation, assets can be liquidated in order to satisfy creditors. In reorganizations, it may be possible to renegotiate or even force new terms on creditors, especially if the altered terms can be shown to net more to the creditors than a liquidation of assets today. 

There is a vast difference between filing bankruptcy as an individual and filing as a business entity. You do not want to be in a position to file personally. Ford, Trump, and Kiyosaki all had business ventures file bankruptcy. Because they were business entities, the faces we think of as business leaders behind the organizations had their personal wealth and assets shielded as a result of asset protection strategies devised long before the bankruptcy. The bankruptcy was limited to the assets and liabilities of the corporate entities that filed for bankruptcy protection. In Trumps case, he has used bankruptcy to renegotiate terms with creditors in a Chapter 11 bankruptcy reorganization. Kyosaki's LCC filed Chapter 7 to avoid paying a judgment against it brought about by allegedly failing to pay royalties to business partner. I believe the judgment was for $45 MM, whereas the LLC only listed assets of $1 MM, so there is a very limited loss, especially to Kyosaki who's personal holdings are protected since the LLC engaged in the business activities and BK.

Long story short, BK doesn't build wealth. The key lesson to take away: as you build wealth, be sure to have a prudent asset protection strategy. The people listed above did, and as a result, had limited exposure to their overall personal wealth when they faced issues with individual investments or ventures.

This may be more information than you need but here it goes. It is unlikely Wells Fargo owns your loan. Most loans are owned by some entity other than the loan servicer that you pay each month. It is very unlikely that Wells even has the authority to sell your loan. If Wells did own your loan, or you were able to ask the actual owner of your loan, they wouldn't sell it to you even if you were willing to buy it a price attractive to them (which is a separate issue discuss above; your loan is performing, why wouldn't they just ask for a payment if full?). There are, especially after Dodd Frank and CFPB, rules that regulate the purchase and sale of consumer debt. There is risk to the seller of legal or regulatory action if the buyer, for instance, violates certain consumer protection or mortgage servicing rules or laws. Additionally, there are transaction costs in debt buying and selling make it more cost effective to sell in bulk. 

This may shine some light on why you won't likely be able to buy not only your own debt, but similar debt, from big financial institutions.