All Forum Posts by: Tyler Sterns

In my area a typical hard money loan is 3-5 points 10-15 percent interest rate, 1-2 years interest only with a balloon payment. Sometimes you see better rates if the flipper is experienced and has a track record with the lender. Borrower typically pays all fees including appraisal fee, title fees, attorney fees for docs, insurance, etc. Your interest rates seem low and no points makes it even that much worse of a deal. But maybe the interest rates quoted are standard in your market. You could ask around and see what other private money lenders charge. 

Yes you are right that if the borrower defaults your exit strategy would be foreclosure unless you want to sell your non performing note for pennies on the dollar. For that reason you would be nuts not to use an attorney to draft your loan docs and have a title company run a title report and issue a title policy. 

Any liens that occur after your loan would be the responsibility of the borrower and would be subject to your loan. Some exceptions could be tax liens, municipal liens and whatever liens in your jurisdiction have Super priority over first lien mortgages. If your borrower stops paying his property taxes you would have to step in and make payments or risk losing the house. 

Was this a foreclosure of a deed of trust? If so, how did the trustees advertise the sale? Did they advertise it as a first position deed of trust? 

The title report you purchased probably has a disclaimer saying that liability is limited to the cost of the title report. Whether or not that's enforceable is the question. The title company probably has E&O insurance for things like this. It may be worth consulting with an attorney to see what your options are.

A title search could probably be done in a matter of hours. 5 days should be plenty of time for a title company to get a title report to you. You should speak to an attorney if you need legal advice about your contract. 

You're welcome Bob. Good luck and let us know how it goes. 

A discharge is when all of the requirements set out by the court have been met by the debtor.  A dismissal is when the debtor fails to meet the requirements set by the court. With a dismissal, creditors are free to pursue  debt collection and no debt is wiped out. 

If there is sufficient equity, I do not believe that lien stripping could occur. The reasoning behind lien stripping is that if there is no equity, a second mortgage is no longer actually secured. You should obviously seek the legal advice of an attorney licensed in your jurisdiction before taking any action. 

Was the bankruptcy dismissed or discharged? One thing to wary of is lien stripping. Lien stripping is when the Court takes a second mortgage and removes the lien and converts the debt to unsecured debt. The debtor would make payments on the second mortgage through the plan and when the BK plan is completed, the second mortgage would be wiped out. 

Are you sure that the bankruptcy is still active? Using pacer you can pull any document from the BK petition. Each pages costs 5 cents I think. There should be something called the plan. The plan will tell you if your note was included in the resolution of the BK. 

If you're still looking for a a foreclosure attorney send me a pm. 

If you had to, you could file a motion to intervene and ask for the court to set the amount of redemption. 

I don't know Arizona law specifically but most likely you do not now have to  buy from the trustees. Typically the borrower still can sell the house up until the Trustees sale.