All Forum Posts by: Bryan Hartlen

Wondering what we should expect in terms of time (and cost) for an uncontested FC in Illinois.  Christian county (not Cooke).  Any recommendations on a good firm (or firms to avoid)?

Each housing authority handles rent increases differently.  We have Sec8 properties in Birmingham AL.  Each year (through our PM) we file a rent increase request (what we're asking for justified by comps).  We have not had any increases declined because of an arbitrary (or governmental) rent increase cap.  We have had increases come back at different amounts than requested because the authority valued market rents differently. In any case, it is our decision to accept the authorities offered rent or to not renew a sec 8 lease if we want to pursue a higher amount of rent in the open market. 

We have Sec8 rentals in Birmingham, AL so my experience may be different. We can increase rents to Sec8 market rents anytime a new tenant is placed.  The AL Sec8 placement process does include an evaluation of the property and location which does affect what Sec8 will pay as does the tenant’s voucher amount. But the authority does this eval. If you have a PM they should be able to explain your authority’s process.  If you don’t have a PM you’ll need to approach the authority yourself. 

Note, that in between leases, we also have the right to not renew a tenant and can then start the placement process over at market rents. It’s usually not worth it for a 50 - 100 / mo increase but you we’re $1000.mo below rents which could make it worth the turnover. 

Quote from @Tom Gimer:

Title would be uninsurable. Big red flag on the DIL checklist.

 Tom, if the DIL was signed, notarized and recorded why would it be uninsurable?  What flag would be raised? 

Is there a better way to structure this and achieve the same end?

Quote from @Wayne Brooks:

@Bryan Hartlen This would likely never stand up, if they knew enough to challenge it.  There are state and federal laws dealing with DIL’s and circumvention of foreclosure procedures.

 With it being called out explicitly in the extension we hoped that it could be argued to be a mutually beneficial decision rather than having the borrower sign over DIL now (which he would be willing to do rather than have a FC recorded).  Thanks

Quote from @Aaron Poling:

I have never seen this but could be a good idea. I would be very careful if this is his primary residence though, as there are very strict rules for how these can be handled and would consult a real estate attorney to structure it. 

Also, with a deed in lieu make sure that the buyer has clean credit otherwise as you may end up accepting his debt as part of the deed in lieu acceptance. Those liens that typically the foreclosure would clear out. 

Good Luck! Thanks Aaron

Not a primary residence.  It's an investment / flip property for another investor.  Good point on the credit / liens... although we'd check that before we recorded.  If it was encumbered we would pursue FC.  Thanks.

Wondering if anyone has executed a loan or extension backed by a pre-signed deed in lieu?

We have a borrower that has requested an extension on his mortgage before his balloon is due. He's current but unable to make the upcoming balloon. We're willing to extend, but want to make sure that we're out of the property within our planned investment horizon and with minimal risk of payments stopping and having to FC.  Borrower has agreed conceptually with the idea of an extension coupled with a pre-signed / notarized DIL that we'd contractually agree to not record unless he defaults. Any reason why this wouldn't work?  Has anyone done something like this before?

@Marco Bario thanks for the reply. I hadn't considered #3.

Quote from @Marco Bario:

Quote from @Adam Walter:

Quote from @Marco Bario:

@James Free 

…

 What are some reasons the junior lien holder would advance funds to the senior?  I'm assuming you're saying that a 2nd mortgage holder would pay the first mortgage holder.  I'm having a hard time imagining the circumstances.  I feel like its good money being thrown after bad money.  

… 

To fend off foreclosure and to continue to control the underlying asset from a junior position. I would never bother paying a lien that's junior to mine, but I would, and I have advanced loans and taxes senior in position to my lien. In some states, HOA's receive super-lien treatment and move into 1st position ahead of debt liens.

@Marco Bario Can you shed a little more light on how the extra expense of bringing the 1st current would benefit you and how it would result in controlling the asset?  If the value of the asset is less than the value of the 1st & 2nd then you’re adding to your deficit unless you see a way for the asset’s value to increase enough over time to compensate for the deficit. Hard to see this happen given that you don’t control the asset so forcing appreciation is hard. If the asset’s value is greater than the value of the 1st & 2nd then FC would result in paying off your 2nd so I’m assuming you’d just let it happen and cash out.

Quote from @John D Cozza:

Not much inventory for sale for 5-25 units, I see two deals on CoStar around 6 Cap

exactly… Inventory is low and asking and closing aren’t always aligned and so many MF deals close outside of Costar and Loopnet.