How Late Is Too Late (Texas)?

Question

If I receive a lead from a homeowner who is behind on their mortgage payments, what things should I be considering to avoid wasting time on a property that cannot be saved from foreclosure? Is there a point of no return that, no matter what I do, the process is already too late? How do I know that that point has been reached?

To take that even further, if I intend to market to homeowners who are late, what is a good "late range" to target? I would think 30 days late is too common and not enough of these folks are truly distressed, just maybe having a bad month. What about 60, or 90 days? Is that too late to be saved?

Any information that can be provided will be very much appreciated!

FYI, I'm in Texas.

Bill Gulley · Answer

Brandon, having the ability to pay off the loan is key to the time line, state law and local custom may allow a loan to be paid off between minutes before an auction opens to a few days prior to a sale. Some loans will require a 6 month notice. Federal law applies to contacting anyone who has received notice of foreclosure, any ploy, transaction, deal, method that can be viewed as a means to take a borrower out of foreclosure, besides a conventional sale, can and very well may be determined a violation of federal law. This is a very sticky area to deal in now.

I'm not just being the "no, you can't do that" guy!

It's not the days late so much as it is the days remaining to get to the courthouse steps, Texas has a quick non-judicial process after notice of demand.

The ideal situation is where the borrower sees the light at the end of the tunnel as a train, before they are late and knowing they can't pay. It also keeps you clear of legal restrictions.

Each borrower is different, different motivations, some will run before they are late (the smart ones) that attitude generally increases as the become more delinquent, but there is also a loan and costs that need to be paid.

Don't forget short sales, if you can buy it.

Installment contracts or Sub-2 deals are harder to pull off once a loan hits the lender's radar screen.

Wholesaling a pre-foreclosure is just plain dangerous, if you lead someone to believe they have a property sold and you fail, you took that property off the market putting it under a sale contract (use an option, and such are restricted in Texas). That takes away opportunities for a seller to sell. They can hang it on you, ruined there credit, losses can be much more than the value of the property.

I've made a very good living out of helping others, curing problems is what I was known best for. One of the reasons I have such a distain for gurus is that they approach any situation as some simple step by step process, nothing in RE is like that and there are different degrees of difficulties in strategies that are not understood by new investors, dealing in or near foreclosures is the most difficult in residential or even commercial deals for an investor type. You aren't just dealing with RE laws, you also have consumer laws, finance and banking laws and beware, bank fraud doesn't require a bank to lose money!

And, in reality, just because a borrower is headed there doesn't mean there is a deal. Few properties have tons of equity to play with, this is blown out of proportion by gurus, having a highly motivated seller with tons of equity as if all will yield big profits, rarely reality.

Now, all that said, late pays can be worked with, prior to notice. So, if you can find those nearing 60 days that have not caught up, I'd begin there, unless they have received notice, then just walk away if you're new.

Additionally, if your contact can be shown prior to notice, and you have the ability to pay off a loan, then by all means, continue. I'd suggest you lean to the contractor side making the property more marketable, a bank shouldn't object to that approach. :)

Dean Haack · Answer

if you can make up the payments on the house nothing will happen then they will and have to take it off the list