All Forum Posts by: Dan Deppen

Wait... the guy who buys all the ads (through Google) on BiggerPockets YouTube videos and attempts to reach BP viewers says that Tax Liens are the best way to build wealth, asking me repeatedly and agressively why I'm not doing it? 

Also, I'd add that any second position debt, preferred equity, or their brother's, sister's or cousins in any shape or form are at #2 on this list, in really any asset class. 

 It would help if you shared what you plan to buy them for other than just saying they’re 10 k to 15 K below market.

I'd do the latter. It will make the loans more valuable if you ever decide to sell them and decreases the chances of default. 

Would the buyers/borrowers be purchasing with the intent of putting a mobile home on the property and making it their primary residence? If so you'll want to follow Dodd Frank and the other consumer rules.

 You want to purchase the land with owner financing or sell it that way?

I think you'll have to show more numbers to see whether whatever you plan to do makes sense or not. 

Has anyone ever sold a property with seller financing then later extended the repayment period or modified the terms of the loan with the buyers? Or even refinanced it to them?

I’ve been searching for a form or contract I could use to recast or modify the terms of a loan that I seller financed a few years ago, with the intention of lowering the monthly payment for the borrowers and extending the repayment timeline. We also need to add in escrowed taxes and insurance to the new terms, as previously the buyers were responsible for paying them, but we’ve recently had to take that over.

Context:

Subject property is a mobile home on land in the state of FL that is owner occupied by the family who purchased it from our LLC. They have had a difficult year and are struggling to make their payments on time each month. We know they're hard working and would like to continue working with them rather than move toward foreclosure, but we know they're in over their heads if we continue under the current terms of the mortgage and don't want to set them up for failure. Our current mortgage terms include a late fee after 5 days, so they're already paying extra each month and have to split the total monthly payment up between 2-3 payments when they get their pay check. The monthly payment is only ~$720 and the interest rate is fixed at 8% fully amortized with no balloon. I know they would be worse off refinancing at today's rates even if they could find an alternative lender able to lend on older mobile homes. And given their recent late payment history, I don't know that they'd qualify with another lender.

We have an upcoming meeting with them to see how we can extend the loan a few more years to make the total monthly payment including installments for the annual property tax bill, which we’ve had to pay for them this year since they were late the last couple years and had to pay interest to the county. 

This is the only property we’ve ever seller financed, in case that clears up any questions you have about Dodd-Frank compliance implications. They hold title, and the mortgage and promissory note were attorney drafted and filed at our local county. 

I do plan to consult my real estate attorney who handled the closing but this is his busiest week of the year, so I definitely don’t want to bug him with something that isn’t extremely urgent until after the New Year. In the meantime I would love to have some helpful information or ideas to share with the buyers when we meet and ideally an agreement/contract we could fill out together once new terms are agreed to and then share that with the attorney so he could draft up the formal instrument for recording.

If you have experience with this type of scenario, I’d love to hear any recommendations you have or any helpful resources you could point me to for the appropriate paperwork.

 What's a friendly foreclosure process? I had a non-performing loan once where a borrower would do a deed in lieu, but there was a deceased co-borrower, and my attorney required me to go through the foreclosure process to clear title.

Thanks. To expand a little on what is mentioned the underwriter's guideline, a DIL does not extinguish subsequent liens, so if the borrower has judgments against him/her/it that attach to the property, the DIL grantee takes title subject to them and may have difficulty getting them released later without payment. In addition, a DIL does not automatically satisfy the underlying mortgage/DOT so if you accept a deed from the DIL grantee you may find a title insurer will require a release or sat of it before insuring.