All Forum Posts by: Pete Storseth

Again I will thank everyone for helping me in this thread. I'm not an experienced note investor and the extra steps involved are being attended to thanks to the advice provided.

Working with a title company to do some preliminary due diligence before I make a formal offer.

My remaining questions I have are the timelines. The title company can likely provide some answers, as an attorney could as well.

With foreclosures paused, will a DIL also be stalled for an unforeseen amount of time?

@Ron S.

Wow. Having a bad day?

As for the DIL, the best case for the borrower is to have either the current lender or (if I bought the note) myself to execute the DIL in order to forgive the debt and move on to sell.

The lender should (in my opinion) foreclose, rehab and sell. If they do, they will take about a 9k loss from what they would have gotten with the loan paid and refinanced. Remember, it's an interest only loan for 12 months. They were expecting a 10 % ROI.

However, even at my lowball offer amount they could keep their profit as of the 7 months paid and just walk away.

My reason for buying from them would be two fold- helps the borrower avoid foreclosure, gain an asset that will turn a profit.

My exit would be to simply evict the tenant (a third party I haven't really mentioned yet) clean and sell at market value.

Problem is, the current economic crisis and lack of potential buyers in that price range.

@Ron S.

There's all types of motivation here.

Sure, I'm motivated by the upside the acquisition could provide.

The lender's motivation is to rid themselves of a property that they aren't able to collect their payments on. Even selling at a discount, still leaving some of the owed profits, would make sense within a reasonable amount.

The borrower has tons of motivation. He cannot pay, a foreclosure would ruin his real estate career, and he could be free of the debt from the property. Sure he has some equity. But holding onto equity is pointless. If he could sell for the value on the market, I would have never gotten his call.

Thanks to all of you for helping out on this. I understand more than I can type. I just want to wrap my head around the process.

How long does DIL usually take? And will COVID19 stall it?

@Chris Seveney

You said my best bet would be to buy the house, not the note. How do I do that? Buy the note, foreclose/deed in lieu, take back the property. Then I get the house?

If this is correct, and I make sure nobody else has any connection to the property via title search, is that sufficient?

@Chad Urbshott

When you say I'm buying the note, not the property, this would mean I inherit the borrower and need the FC or DIL. I get that.

When you say the lender has no equity and the borrower has all of it, makes no sense to me. He paid 7 months of interest only!

@Chad Urbshott

I'm confused on this. Literally the borrower has paid zero principle.

@Chris Seveney

Borrower has no equity. Note is note more than the house's worth

@Rick Pozos

You and I understand it the same way