All Forum Posts by: Dan Deppen

 Lol, those 3 things perfectly describe a program I did with a guru 7 years ago.

The world of real estate tends to be pretty medieval from a technology perspective. A financial calculator and legal pad might work in the hands of someone who knows what they are doing, but that doesn't mean it's the best way to do it. A horse and buggy might get me where I want to go, but I'll choose other options.

That being said, just because someone is using an algorithm doesn't mean it's the right one. I'm not familiar with these platforms, but it sounds like they aren't mature enough yet to capture the important nuances that Chris mentioned. Having models is great if you understand their limitations. Self-driving cars are potentially amazing, but they need to capture a lot of nuance and complexities. Give me the horse and buggy vs a self driving car with immature software and sensors any day.

My point is you should use as much technology as you can to make your life easier without going beyond its limits, and in the meantime always be on the lookout for new solutions that solve problems without creating new ones. Having worked for both tech startups and large tech companies, there is a tendency for organizations to focus on one competency, usually the one that the founder has. To build a platform like that, you definitely need technical skills, but it needs to be informed by real estate domain experts as well. You also need UX, support, quality, a million other things. You can't just solve one piece of the puzzle and then ignore other important pieces.

 What are the costs for the value adds, the expected hold time, and the expected sale price? 

I could be misunderstanding how this deal was structured, but wouldn't the seller who is on the underlying mortgage have an incentive not to let it go into foreclosure since their credit is at stake?

 That's correct, you've got it.

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 aren't required to offer a loan mod prior to foreclosure. Is there a particular state or scenario that calls for this? I know PA has a process to go through before you start a foreclosure, but have never seen a requirement to offer a mod.

 Thanks, got it! That's what mine was. 

 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.

 Buying for $40K and selling for $80K with no improvements doesn't make any sense. As Jay said, someone is getting screwed. Most likely, it's a home with serious problems and an unsophisticated borrower who is probably a first-time homeowner who doesn't know what they are in for. Any attorney general is going to frown upon this seriously.

Contracts for deed are not what they used to be. The CFPB made it very clear recently that all of the same consumer protections apply to them: CFPB Takes Action to Stop Contract-for-Deed Investors from Setting Borrowers Up to Fail There are very few if any places these days where you're just going to easily toss a borrower out with a land contract. Even if you can, why do you want to create a note that has such a high risk of default?

That system is basically: 1/ take advantage of PMLs who don't understand the market, 2/ Take that money and use it for a predatory lending scheme. All the various consumer laws exist specifically to stop bad actors from doing stuff like this.