All Forum Posts by: Ron S.

@Nick- I didn't say it, you did! Glad it worked out for you on your future deal with them.

@Christian - It didn't land him any deal in this case and as he pointed out himself, may have just labeled himself crazy by the bank.

@Jake - I'm not sure i'd consider that "Higher Level" strategy. You are skimming rent for the period between acquisition and foreclosure. That's not very high level. You are a short term opportunist. I'm not saying there's anything wrong with it, but I still wouldn't call it a high level strategy. You are creating the recipe for disaster with this.

You engage a tenant to rent with the disclosure that it's going to be in foreclosure and mitigate that with a lower market rent, and the possibility (not probability) of cash for keys from the lender when they foreclose? So, any "decent" renter wouldn't put themselves into this situation. They would not be considered a legitimate tenant in the eyes of the lender as the lease (Assuming you have one) is between the tenant and you, not the borrower so, the tenant would not be protected with any of the "Protecting tenants at Foreclosure" rules. Their lease would be nullified and they will be evicted if they don't leave after sale.

As you admit, the other "strategy" is also unlikely considering there is NO incentive for the senior lien holder to negotiate a short payoff on a loan you do not have.

At the end of the day, you are the only one that benefits with a potential of six months rent. Again, I'm not saying that's unethical or immoral but, let's call it what it is and not give it any more credence than it deserves.

Finally, i'd be very careful about conveying to a prospective tenant that they could get cash for keys as an added bonus/incentive to enter into a lease with you because, if they don't, you subject yourself to being sued by the tenant.

1) No "Most Efficient" way. Many have different methods. Read the papers, call the trustee number on the notice of sale, etc..

2) See your number 4 question to answer this number 2 question! Paying someone $500 bucks to ensure you are spending $200,000 bucks wisely would be insane in my opinion. Yeah, pay them but, do your own research and make your own conclusions.

3) I haven't but, I know many that have and I've gone to sale with my junior lien and had someone bid thinking they were getting it from the senior lien holder. They didn't believe me until I put THEM into foreclosure for not paying off the first (I was servicing the first too).

4) See #2 and #3

5) You guestimate, based on experience and/or worse case scenario. What would a total electrical job cost for a house? What would a total kitchen cost, a new HVAC system, etc..

6) There are the usual suspects however, bidding high to scare away other bidders is just stupid. They have to pay the higher price for the thrill of scaring you away? They are only going to bid what their financial models tell them to bid. I go to sales and bid on behalf of the bank, backed by $4 billion in assets and as many cashier's checks as I want but, if the mom and pop first time investor come to bid, and bid more than I'm willing to spend, I walk away. I wouldn't be in business long if I outbid them to scare them away. I don't see people bidding for the purposes of pushing others around. I think that's more urban legend than anything else.

SMH...

...and banks aren't in financial trouble these days. Failed (Failing) institutions are a thing of the past for the most part and any bank failing, would more than likely be acquired by the FDIC and sold to another bank under a loss share agreement with the acquiring bank.

Your first "reason" contradicts your statement. If they have excess reserves, they probably aren't in financial trouble. To your theory though, not being in a hurry to speed up the process just doesn't make any sense and, would be in violation of CFPB rules to decision any alternative to foreclosure within 30 days of receipt of a full package.

Your second "reason" Wayne already refuted. I would only add that while they are the majority player, Fannie/Freddie aren't the ONLY secondary market out there. Assuming the loan was sold to the secondary market, the investors want as much yield on their investment as possible so they are even more motivated to process the transaction.

I've personally found a majority of delays in a short sale transaction to be the borrower and/or the agents involved. The borrower hires an inexperienced agent to do a short sale and the agent has no idea where to start other than to do what they always do, list a property for sale and hope a buyer comes in. They open escrow, escrow sends a demand to the lender, lender comes back with a demand higher than sales price. Everyone scratches their head and asks what happened. When the dust settles, the agent realizes, "Oh crap, this is a short sale". THEN they start over. They call the lender, and lender says, Need 3rd party authorization. They get it. Agent asks what’s needed. Lender says, "Short sale package". After agent figures out what that is, agent goes and gets short sale addendum and THEN contacts borrower to tell them, "Hey, need a short sale package from you, like 4506, income/expense and budget forms, paystubs, tax returns, etc. Borrower says, "What? I thought we were ready to close, what's this last minute stuff". Agent blames lender. Borrower finally coughs the stuff up and gives to the agent". By this time, buyer's walked.

Process starts over with new buyer. Agent finally catches on and submits new short sale package. Borrower finally catches on and realizes there are many cogs spinning in this thing. Lender goes back and says, "Pay stubs are old and stale dated. Need everything updated. New income/expense/budget, etc..". Agent finally submits everything and it's all updated except...Lender has a new appraisal now because so much time has passed and value has gone up. Everything needs to be redone again. Buyer walks because they won't pay more.

...Starting to get the picture here?

I'm not saying that is the way all short sale transactions work but, at least at my bank, if there are delays, that's usually why and oh, forget about it if there is a first and a second lien holder involved (Well...don't forget about it, just remember you have two lenders to give the same info to). If you have a half decent agent, the delays and headaches are significantly reduced.

Like the blog says, it's not the flipping or the non arm's length transaction that makes it illegal. It's the failure to disclose. People fail to disclose because the lender will say no to the transaction so, they lie and do it anyway. It's all fun until someone gets caught doing it. If you ask yourself, "Would what i'm doing be ok with the lender" and you say, "No", chances are, continuing with it could be illegal.

Who cares if the lender likes it you ask? Well, considering the lender is more than likely a federally regulated and insured instituion, defrauding them makes it a federal offense and sticking it to them on a transaction because they are the big bank that caused this mess in the first place, isn't the defense i'd want to use in front of a judge.

Just my two cents.

there is no public knowledge of california delinquency at 90 days. It's 120 days before you can file the NOD for a default due to non payment so, anything prior to that is NOT public information and anything not filed as a Notice of Default is not public information. That list does not exist legally and anyone that would provide such a list is breaking policy and procedures from the company with the borrower at the very least, and Federal law at the most.

There isn't a legitimate company in existance that is going to give you a list of delinquent homeowners. At least, not "delinquent due to non-payment" homeowners. That is not public information until the Notice of Default is filed. If you buy, or someone publishes to you a list of borrowers that are delinquent and gives you their name, address, contact information, they or maybe even you, may be in a heap of trouble if the customer complains.

Privacy laws have both state and Federal teeth in them. Let's reiterate, NPPI (Non Public Personal Information) is not to be shared without the person's expressed authorization. Delinquent tax data is public. Legal filings for foreclosure (And bankruptcy) are public but delinquency information that is not public information, cannot be shared without the borrower's knowledge and consent.

@ Marc - According to Michigan statute: Redemption rights, which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. The redemption period varies but a deed issued as part of a foreclosure only effectuates a transfer after the expiration of the redemption period (Take that Winkler!)

In my opinion, I would request a redemption quote from the foreclosed borrower (They call the lender and find out what they have to pay), so that you know exactly what that amount is.

If you want to read the actual statute:

(1) A purchaser's deed under section 3232 is void if the mortgagor, the mortgagor's heirs or personal representative, or any person that has a recorded interest in the property lawfully claiming under the mortgagor or the mortgagor's heirs or personal representative redeems the entire premises sold by paying the amount required under subsection (2) and any amount required under subsection (4), within the applicable time limit prescribed in subsections (7) to (12), to the purchaser or the purchaser's personal representative or assigns, or to the register of deeds in whose office the deed is deposited for the benefit of the purchaser.

(2) The amount required to be paid under subsection (1) is the amount that was bid for the entire premises sold, interest from the date of the sale at the interest rate provided for by the mortgage, the amount of the sheriff's fee paid by the purchaser under section 2558(2)(q), and an additional $5.00 as a fee for the care and custody of the redemption money if the payment is made to the register of deeds. Except as provided in subsection (14), the register of deeds shall not determine the amount necessary for redemption. The purchaser shall provide an affidavit with the deed to be recorded under this section that states the exact amount required to redeem the property under this subsection, including any daily per diem amounts, and the date by which the property must be redeemed shall be stated on the certificate of sale. The purchaser may include in the affidavit the name of a designee responsible on behalf of the purchaser to assist the person redeeming the property in computing the exact amount required to redeem the property. The designee may charge a fee as stated in the affidavit and may be authorized by the purchaser to receive redemption money. The purchaser shall accept the amount computed by the designee