All Forum Posts by: Adam Adams

I usually hire loss mitigation experts. I haven't found a servicer that I am happy with in regards to loss mit.  Polaris Counselling and Singer Law Group are who I recommend. Both are out of California.

Usually the servicer will start the process. It is usually good for you to know the process so that you can tell if your servicer is handling it correctly. First they have to go into default. 30 days usually does the trick, but some servicers will wait for 120+. Then the legal notices go out, or postings and such, depending on the state. Each state is different, so different things can happen. Some states you can accelerate the note and demand full payment of the entire note. Some states will only allow reinstatements, such as Michigan. Some have a combination where you have to give a reinstatement period and then you can accelerate the note. You should not be doing anything in regards to this without talking with your local attorney. Some states are quick and some take years. And then get all that, then the borrower declare bankruptcy and you have a whole new set of rules. So a shorter way for me to answer this is... every state is different.

And with all of my comments comes the caveat. You are the passive. Bug the lead in the deal and make sure he knows what's going on. He should know the rules of that state that you are investing in with him.

You wouldn't really be buying your own note. You'd be doing a payoff. Any borrower can payoff a note early. Is there a servicer involved? You can ask for the early payoff amount. If you are trying to keep a lien on the asset, then you'd need to have it held by another company. So the other company would make the offer to buy the performing note, then it would transfer to the holding company. 

Is that what you were asking?

@Christopher Blake

I can't answer your question, but I have something to say about St Louis tax sales. I am assuming you are from St Louis. The city does not have a redemption period. The county has a 1 year redemption period, unless it was the 3rd sale. 3rd sales do not have a redemption period.

So if you are buying from the county and it isn't the 3rd sale, then you need to be aware of the rights of the previous owner. If you fix it up, they can legally come back and get it.

Anything over what the lender is owed goes to the borrower. So if you bid up the price and win, then you have to pay the difference out of your pocket, even as the lender. If someone else wins the bid, you only get paid for what you are owed, the rest goes to the borrower.  So unless you actually want the house, there is no reason to bid it up.

@Justin B.

Everyone is different, but this is what I go with.

I'm bidding around 55%-65% of the UPB or the As-Is value of the property, whichever is lower. The going rate seems to be higher lately, but that doesn't mean it is a good rate. Once you have that number, you subtract out any delinquent taxes. Depending on the state utilities, I might subtract out the water as well. In some states the utilities stick to the property, not the borrower. So if she owes 150k and taxes and utilities are current, I'd start my bidding at $82,500, which is 55%.

@Will Chitwood

It sounds like you are buying a performing note on a turnkey investment. It would be the same due diligence as any other note. Check valuations, liens, taxes, etc. 

I would find out what their servicing rates are. Maybe you don't want them servicing it compared to other servicing companies. As the lender, the servicer is your choice.

I know I said that the water is getting fixed quickly and then I said contradictory info later in the post.  I started writing this while on my way to Flint today. Then finished the rest of it after I talked with my guy up here. I've got two guys telling me different things on the issue in regards to the velocity of the fixes. I don't think anyone knows that isn't in charge and has a map. Some of my houses have had their pipes changed out. 

And it is only the city of Flint that has the problem. The Township of Flint does not have a problem, Mount Morris does not have a problem and the rest of Genesee county does not have a water problem. Just the city of Flint.

They still use the water for bathing, washing dishes, washing their clothes, watering their lawn, washing their car and anything else you can think of. I've got over a dozen properties in Flint and I can tell you the pipes are getting replaced rather quickly.

Anyways, I can say that the lead is only part of the problem, if it is a problem at all. The city is passing out water filters, free water and other services to make sure people do not have to drink contaminated water. The main problem with the water liens is that the price of the services went up a couple of years ago. My understanding is that Flint has some of the highest water rates. You raise the price, then you'll get a higher rate of non-payment as well. I think that is the biggest factor with the water liens.

In regards to fixing the water, they have to go house to house. And not all houses have problems. You might have a street with 20 homes and 5 need the pipes changed. Then you go over a street and and 15 out of 20 need changing. The crews do not know which houses need the fixes until the water is tested from the tap.

However, it is getting fixed. I hear from some that it is chugging along rather quickly and others tell me it's slow. I don't know myself.

My CPA just chimed in. By keeping the assignments, deeds, etc in the LLC of the lead, there is only one entity that owns that asset and no partnership is created. He says by adding the passive JV to the title or deed, you are creating an implied partnership and can be taxed as such.