Non Performing Note Investing

[Emory Crawford]

Does anybody know why fix and flip investors don't just purchase the non performing notes on properties and flip them from before the auction? Don't know if I'm making sense, but I figured I'd ask...

[Don Konipol]

Purchasing a promissory notes secured by either a mortgage or deed of trust is a lien or encumbrance on real property, not equity ownership.  In order to gain actual ownership, the lien holder must foreclose on the property, actually on the security interest, I.e.  the mortgage or deed of trust.

Foreclosure laws are different for each states.  Always proper notice must be given, both to the property owner directly and posted in a public domain.  Further a notice of note acceleration also must be given. Texas has the shortest period of wait before the actual foreclosure sale can be held.  It is possible to foreclose in Texas in as little as 21 days, although the quickest I have ever seen was 45 days.  Many states have foreclosure proceedings that can take a year or more, especially mortgage states requiring judicial foreclosure.

This is also assuming that the property owner just lies down and does not fight back. It is pretty standard for a circuit court judge to issue a temporary restraining order stopping a foreclosure, usually in effect for 60 or 90 days, with cause merely stated in the petition, no actual documentary proof required.  

Further, any bankruptcy filing automatically stays foreclosure, the mere filing will stay the foreclosure the usual 90 days the debtor has to come up with a preliminary plan, a 60 day extension after that would usually be granted by the court.  The lien holder can petition to have the stay lifted, but until the debtor has the opportunity to make his case almost certainly the petition will be denied.

Hope this clarifies