All Forum Posts by: Dion DePaoli

 Ivan,

Much of this is counter-intuitive to your original post.  If your desire is to acquire notes which give you the best chance of foreclosing (you referred to it as eviction), then the notes themselves will actually be non-performing.  A note holder can not initiate foreclosure on a consumer RE loan unless it is at least 120 days past due.  

Also, the verbage here by using the word "flip" is very, very misleading.  Flipping as a general concept for RE is when you purchase real property for a short time and resell.  Maybe you improve the asset, maybe you do not.  The same model applied to notes requires downstream buyers that will bid greater than you in order to create any potential arbitrage.  In an NPL scenario there is likely little to no value add to an NPL which creates a discernable arbitrage.  So theoretical pricing would essentially be similar among similar parties.  Cost of capital is more or less the driving force of price differentials.  Any loan takes the same amount of time for me to foreclose as you to foreclose.  So unless our costs going into disposition are different by total capitalization or total time, our bid for the asset should be identical.  

Often times newbies look to reinstatement as the value add.  This is certainly true, a performing loan will fetch a higher price than a non-performing one.  However, the time to hold the loan is not short.  Likely north of a year and perhaps more like north of 2 years.  

Understand that there is no secret to a loan which falls into default.  (90 days past due or more)  The remedy is provided by the security instrument and that is foreclosure.  Now, there are alternatives to foreclosure but the meat and potatoes of the idea is simple, you foreclose when a loan defaults.  The options do not change between lien priority.  A lien may only ever foreclose.  That is it.  Junior liens have some considerations to contemplate due to the priority in title they hold.  Mainly, any superior lien can foreclose on a junior lien.  A junior lien cannot foreclose a superior lien.  A superior lien does not have to grant any capacity to a junior lien holder, whether or not they become a title holder through foreclosure, any reinstatement rights.  Most interested junior parties to any lien have a right of redemption.  (Most because not all liens are mortgages/deeds of trust and some do not possess that power)

Lien priority is not secret nor is it hard to figure out.  By its very nature priority in title is perfected upon constructive notice which is the recording of the lien in public record at the Recorder's office.  Priority is set by first in time correlating to first in line.  First to record is first and so on.  A borrower/owner gives up that superiority in their title when they take out a loan and give a mortgage or deed of trust.  Or in some other cases by court order, super lien status or by commencement of work.  The chain of title can be discerned from the public record then by search, either you or a service provider.

@Queen Keoka

If the MFR was granted then as the Mortgagee in succession you are relieved of the automatic stay. You will not need to file a new one in the future. You will still have to file a Transfer of Claim to give notice to the BK Trustee of the change of Mortgagee. If the borrower remains in default you can proceed with foreclosure. Obviously, just make sure the MFR was granted.

It's not clear what the consent order was pertaining to.  So, can't comment much there.

It is good the borrower managed to catch up the property taxes.  Sounds like there is a chance to set up a repayment plan with the borrower to catch the back payments up.  

That is not correct. The MFR is a request to be relieved of the injunction on collections. The property is a part of the debtor's estate until the property is properly foreclosed. An MFR does not grant or give the lender title to the property. It simply allows them to pursue the available remedies within the security instrument and note.

@Queen Keoka those MERS stories are probably pretty old and dated.  There is not much controversy surrounding MERS.  A couple years ago MERS updated its rules which force Mortgagee's to remove loans from the MERS system in the event of a default.  

Having a wet ink security deed is not that big of a deal.  Much of the utility of the document is achieved at recording.  So having the wet ink laying around in file doesn't mean or do much.  

At the start of any BK a protective order is issued which is the order of stay. The previous Mortgagee filed a Motion For Relief of Order of Stay. That likely comes on the premise the borrower is not making their required post petition payments as the BK plan warrants. If the MFR is granted, then you will still have to foreclose, it does not mean the property becomes REO.

The security deed is recorded, so it can't be lost.  It is in public record forever.  Seller doesn't really need to have a copy in file.  You can always get a certified copy from the Recorder's office.

MERS assignment is no big deal.  Most loans are put into securities.  Also, no big deal.

Allonges endorse the promissory note not the AOM.  

If you are skeptical, you shouldn't buy it.  If the loan is in an active BK and you don't understand how to deal with that, this probably isn't the loan for you.  

I only read some of the responses here and quit some ways down as many folks seem to be missing key points here.  Including you OP.  

A) As of November 2016 - tenant still has possession of property
B) A notice of rental increase, many months ahead, is not a breach of contract
C) Abandonment loss does not occur until the property is vacated by a tenant 
D) As a Landlord you are not responding to this tenant correctly

The current contract which details the lease of the property and the current rent which is good through June 2017 prevails.  Giving notice of a price increase 7 months ahead of time is absolutely not a breach by the landlord in the covenants of a rental agreement.  Had you attempted to apply that rental increase to this active contract, that would be a different story.  But you didn't so let's not go there.  

Presumably, the current lease agreement states the tenant is responsible for any loss if they breach the contract which includes abandonment and voluntary surrender.   To be clear, the tenant is voluntarily surrendering the property.  When you told them you would raise the rents and they said they would leave you should have also made it very clear, they are financially responsible for the total amount due until the lease terminates or you find a replacement renter.  There is a sense that some degree of this idea is being kicked around by the tenant and the OP but to what explicit degree is not clear.  

As the landlord, you are not obligated to pro-actively seek a rental replacement until after they vacate.  The condition of the property when they vacate is unknown until such time as they vacate.  The property may not be rent-able and as the landlord you must regain possession prior to being able to offer the property back out to another renter.  Again, right now, November 2016, the tenant has possession of the property.

As the landlord, you do not owe the tenant any list of actions or responses on their demands.  He/she is just being ridiculous.  On top of that, they misread the statute.  

I would respond to the above email reminding he/she that they are not in any way obligated to terminate the lease early.  By terminating the lease early, they are creating a financial hardship onto you in having to spend the resources and time to find a new renter.  Their vacating the property will force you to seek all legal remedies during the time rent is not paid per the contract.  Per the lease agreement and state law the tenant is obligated for the full term of the lease and all payments.  

Once they vacate, if they do, then you can inspect the property and make it rent ready again.  The tenant would likely, per your lease agreement, surrender their deposit, if any, for breach of lease.  You can use that against any repairs and rents due until you find a new renter.  

As a landlord you have no obligation to advertise for a renter prior to their vacating.  You have no explicit timeline as to finding a replacement renter.  You have no explicit requirement in how you search for a replacement tenant.  Let us assume, with a dash of common sense, it is in your best interest to rent the property as soon as you can, because, well, you know,....money.  Once that rental agreement is executed, the day before the first day of possession granted to that new renter is when the previous (vacating) renter is relieved of their obligation under the current agreement. (You can't collect what would be double rents)

I would tender a letter to the current occupant which outlines these ideas and clauses from your rental contract.  I would also include a total amount due under the terms of the lease from December 2016 until lease term.  I would note that the property will be inspected by you and provided there is no damage, the security deposit will be applied to unpaid rent.  I would cordially inform them via the same letter you will, per statute, seek a new renter but they will be responsible for any and all unpaid rents and fees per the agreement.  Sorry to see you go and all that nice stuff.  

I wouldn't engage any other type of correspondence or conversation.  When you have it rented, make your final payment demand and give them time to cure.  If they do not, file in court for your unpaid rent and fees - if it is worth it.  

Next time, don't let the tenant turn this into a circus.  Good luck.

 Scott,

Do you think that begs the question to some degree?  It looks like he took some of your seminars and as stated above is still fairly new.  Being experienced in other facets of real estate doesn't mean being experienced in notes.  He lists some of the notes he has purchased and worked through with a general theme of them not going the way of easy disposition.  

You mention he is not an educator yet here he is out trying to have multiple training sessions.  His information suggest more than 2 seminars or sessions of training per year.  In fact, he has training listed as his number 2 service and has "events" as a main theme throughout his website.  He held a couple 30 attendees at some training sessions already according to his company Facebook.  He also lists you and your training and mastermind group as a form of credential for this asset class.  Is a reader to assume he is a student of yours and the mastermind group he advertises is linked to yours?  

Do you think a newbie like this should be out teaching other newbies?  It seems many students tend to follow this trend.

I don't think it is a good idea.  Just because you watched Air Wolf doesn't mean I want you piloting a helicopter.  Thinking you know can be more dangerous than knowing you don't know.  

Gary, chances are you don't have enough capital for this to be a meaningful statistic.  Approach your needs as a function of yield and total return.  

Chances are you are not obligated to comply with that inquiry.  The seller should have collected that prior to making your finance arrangement.  The finance contract is made and can not be amended without your agreement.  So it won't hurt you to comply to a point you are comfortable.

Refinancing seller financing within 12 months is typically treated like a purchase transaction.  After 12 months the lenders will treat the transaction like a refinance.  That will likely be what you bump into wherever you go.  

Never heard of them.  Doesn't look like a ton of experience.  Not sure if I would consider them experienced enough to teach but that seems to be the norm lately.    

All that said, I did find their testimonials pretty comical.