All Forum Posts by: Daniel E.

Hello,

I own one non-performing note. Chapter 11 plan was approved in early 2020. Do I need to report this income? Will I owe taxes?

UPB: $50k

Legal: $85k

2020 Pmts: $15k*

LLC costs related to note (force-placed insurance, legal bills, interest): $12k.

* the vast majority of the payments went to pay the costs of getting to an approved plan. Going forward, they will actually reduce my basis.

Have a borrower who has been fighting foreclosure for 12 months. Chapter 7, mediation, appealing denials, etc.

Borrower has offered to pay $700/mo, which is 50% of thier income. We feel this is unaffordable, and will inevitably end back in FC.

Any creative ideas? We are trying to mitigate the potential that we drop the foreclosure, re-write the note, receive one payment, and are back at square one when they default.

My original plan was to ask them to consent to judgment, and potentially execute a lease. Thoughts??

@Chris Seveney

Have a property listed for sale and the seller has pointed out a bowing basement wall. Closing will be contingent on an inspection. We are already out-of-the-money on the deal. 

Given my past experiences, very worried about someone coming out and telling me I need some expensive repair, as this seems to happen across the board - $15k for windows (2nd bid for $5k) $18k basment waterproof (2nd bid 5k)...i could go on and on.

One contractor told me "don't let anyone tell you that you need to fix that wall - it's not necessary". 

Can anyone recommend a structural engineer that can give an honest opinion - not one that is trying to maximize their bid?

Thanks!

 This was my intention - until some of the above (including mentors outside of bigger pockets) stated that in many cases, you fight/deny a deal in mediation just to spend time and money and the judge eventually does whatever they want. But I think the confusion was that people thought this was a C13 or something.

Lawyers are saying to take the fastest path to FC. 

That's what I did - obtained relief and proceeded with the foreclosure. They asked for additional time to answer the complaint, then requested mediation.  

This is what I am wondering. Do I have to offer any 'reduced plan'? This is not a BK13 where you probably should consider agreeing to whatever plan. 

They are 12 years behind for a multitude of reasons, including the debt sitting with some guy for years and he never did anything with it. Interestingly, I called to check on taxes. They were like whoa, yea, they are way behind, we are referring this directly to foreclosure by the county. Not tax sale, just right to direct foreclosure.

 That is correct. We received relief from stay in the chapter 7. The mediation request was done in the foreclosure, outside of the BK.

My confusion still exist in how they can fight/delay the foreclosure after discharge/relief from stay. 

Looking for a recommendation to replace 18 windows in a single family home in Toledo, Ohio. Contractor or company is fine. Anything you can provide is appreciated! 

John,

I’ll attempt to explain to the best of my knowledge, although I am still figuring this out.

Borrower filed bankruptcy. We obtained relief from stay.

The borrower is now removed from any personal liability on the debt. We can no longer contact them and ask for any payment/workout.

However, they are still on title.

We continued our foreclosure and the borrower was named as a person of interest in the property due to their title ownership. They, along with any other lien holders, people who were named as having an interest, etc, can still object to the foreclosure, by nature of being defendants. 

Borrower filed a motion to extend. 

Borrower filed a motion for mediation. 

I think the take-away is that in mediation they can ask to reinstate the mortgage, structure a DIL, who knows. As long as it is somewhat reasonable, the lender should agree. If not, the case will go to trial and the judge can agree to whatever they want to agree to. 

If it is not reasonable and all parties agree there is no real way to pay the mortgage, mediation concludes, with no result, and the foreclosure continues. 

I remain confused how the borrower has been relieved of any liability, but can roll the dice and try to reinstate the mortgage at some crazy non-market rate. They are only a part of it by virtue of being a title holder. They have no liability or debt attached to their name. What are they trying to reinstate?

Maybe someone can explain that piece! 

Thank you all for taking the time to write up your responses. The insight of industry professionals is truly invaluable and I am greatly appreciative.

@Wayne Snell

Thank you for your contribution. Love the ideas. Specifically, "The attorney should argue if it is feasible that can pay for the next 40 years?" That is a real strategy here.

@Chad U.

We do have a BK attorney. They did not state reaffirm or surrender - left it blank. Never responded to any attempts to contact. We obtained relief from stay and continued the foreclosure. 

We did consider property taxes and are more than protected by our all-in basis. However, we are hesitant to advance $12k when a BK judge could make us take $100 payments for the foreseeable future. 

Scenario question:

We are required to accept $100/mo, but nobody pays the taxes. Next month, taxes foreclose. At the sheriffs sale, do the excess proceeds above the taxes come to us?

Have not shared any non-public information. You can look up any of this online.