All Forum Posts by: Rodney D.

I am curious what experienced folks think will happen from fall of 2018 to spring of 2019? I’ve been flipping homes in the Northern Virginia/DC area for the past 17 years and have no desire to get surprised by a sudden market downturn. As you can imagine, it’s no fun investing hundreds of thousands of dollars and months of renovations into a property which is worth less than when you bought it. So forecasting is very valuable. Concerns are: 1. National Association of Realtors reports that loan applications have tanked in the last month – October 2018 2. Sales have dropped since this time last year 3. Local realtors are reporting a market contraction 4. Higher-priced homes – in this area, over $1 million, are sitting on the market. A canary – in – the – mine indicator. 5. Deals are extremely hard to find , possibly indicating cresting a market peak. I don’t like sitting on the fence, but hate getting burned even more. Now, we all know that the real estate markets are hottest during the spring and fall. The recent hot market has plowed through what is normally the summer doldrums. What I am having trouble with is determining whether this market cool down is reflective of normal, post – Fall slow down and transitioning into a buyers market – or – is it indicative of a more significant bubble burst? What are your market forecasts for the next six months?

Has any one had success asking the tenant to choose the monthly date of payment on their lease? 

As most folks get their job payments on the 15th and 30th, maybe an alternate Rental Due date may decrease late rental payments?

Tony, great insight!  Any other tips you can share?  1000 units makes for some incredible "in-the-trenches" experience.  What percentage are simply dead-beats?  Any tell-tale signs?

No, your attorney can take your place in court.   You don't have to be there.    For big multi-unit rental developments you'll see the judge call the first case and hear all the OTHER cases that attorney is handling for the rental development.  The owner/representative for the development is seldom there.

Of course you need to prep your attorney on everything you know and give him all your documentation.

Since I have it available from my notes, and there seems to be the question of whether the Trustee lumped the judgement in with the foreclosure sale, here is the newspaper ad:

Trustee's Sale 4502 Kerrybrooke Drive Alexandria, Virginia 22310 (Tax Map No. 0821120045) Default having been made in the terms of a certain Deed of Trust dated October 14, 2008, in the original principal amount of $341,212.00 and recorded in the Clerk's Office of the Circuit Court of the County of Fairfax, Virginia in Deed Book 20147, page 1097, the undersigned Substitute Trustees will sell at public auction on May 20, 2015, at 10:00 a.m., in front of the building housing the Fairfax County Circuit Court, 4110 Chain Bridge Road, Fairfax, VA, the property designated as Lot 45, Section 1, KERRYBROOKE, as the same is duly dedicated, platted and recorded in Deed Book 2923, at Page 598, among the land records of Fairfax County, Virginia. Sale is subject to all prior liens, easements, restrictions, covenants, and conditions, if any, of record, or other matters which would be disclosed by an accurate survey or inspection of the premises. TERMS: CASH. A deposit of $34,000.00 or 10% of the sale price, whichever is lower, will be required of the successful bidder at time of sale. Prior to the sale, interested bidders will be required to register with and must present a bid deposit which may be held during the sale by the trustee. The bid deposit must be certified funds and/or cash, but no more than $10,000.00 of cash will be accepted. The successful bidder's deposit will be retained at the sale and applied to the sale price. If held by the trustee, all other bid deposits will be returned to the unsuccessful bidders. Settlement is to be made within 15 days. The successful bidder will be responsible for obtaining possession of the property, and for all costs and fees related to recording the Trustee's Deed, including the grantors tax. The successful bidder will be required to execute a Memorandum of Trustee's Sale, available for review on the Foreclosure Sales page of www.glasserlaw.com, outlining additional terms of sale and settlement. A Trustee's Deed will be prepared by Trustee's attorney at high bidder's expense. This is a communication from a debt collector. Glasser and Glasser, P.L.C. on behalf of Atlantic Trustee Services, L.L.C. and/or REO Solutions, LLC, Substitute Trustees, Crown Center Building, Suite 600, 580 East Main Street, Norfolk, VA 23510, File No. 200736-1, Tel: (757) 321-6465, between 10:00 a.m. & 12:00 noon only. April 21, 28, 2015 11907633

Appeared in: Washington Post on 04/21/2015 and 04/28/2015 Nothing in the ad mentions the superior judgement specifically but these ads are usually boilerplate anyway. When I mentioned the judgement to the Trustee, even he seemed surprised there was a superior one on this property.

This is such a good discussion, where to begin...

So the auction occurred this morning, and as is typical, it opened up too high -- nobody bid and it went back to the lender.    After the auction I asked the Trustee the very same questions (we have a friendly history).  I also asked my settlement attorney who is HIGHLY knowledgeable, to see if there were any differences in the answers received from either attorney and the responses receive here.

Here's what I was able to find out. Please keep in mind that these answers apply to Virginia and may be different in your locals. Although my research has led me to believe CA and VA read from the same law book:

1.  Does the judgement/lien attach to the property even with no address listed or recorded with the judgement?  YES.      @Wayne Brooks: was correct in that it attaches to any property that person owns in the county it was recorded in.  The Trustee also cautioned as long as we were sure that it is the same person and not another person with the same name.   A judgement on "John Smith" without address information could get rather difficult as to what property it would be a judgement/lien against.

2. If it does, is it 50% of the amount of the judgement, or the whole enchilada?   The whole enchilada.  All defendants listed on the judgement are responsible for 100% of the judgement (each) until the judgement is satisfied, whether either/any of them own property in that county or not.  I was told that many plaintiffs, when awarded judgments, sometimes file "domesticated judgments" in the counties that they "believe" the defendants will likely reside (if they don't have a permanent address at the time of the award) in the hopes of attaching their judgement when/if they do purchase property in that particular county.

3. Is it true that judgments have an active "shelf-life" of 10 years, barring any renewal recordations? Or do they remain active forever?   This answer is a little more involved.  The "simple" answer is (in VA):

Judgements, if filed in "General Sessions" Court survive 10 years (unless renewed).

Judgements, if filed in Circuit Court survive 20 years (unless renewed).

IRS judgements survive 10 years (unless renewed).

The confusion (not in this case) comes when an out of county court awards a judgement to the plaintiff in "General Sessions" court, then Plaintiff files a "domesticated judgement" in the Circuit Court of another county.  That remains unclear but for the moment I am satisfied with the answers given for my need.... with one exception:

Originally posted by @Dion DePaoli:

 The question at large is whether the lien will survive the auction because it is superior. In that question you should be able to get a good answer from the county or any title agency for the area. In some instances the county will not allow (by law) the lien to survive since there is no longer an interest held by the debtor which the lien attaches. So, the JL may get an auto-pay off by riding the coat tails of the Mortgagee foreclosing. In those situations, the Mortgagee would likely advance to pay the lien, add the balance to their total due and proceed with the sale. The Mortgagee may also then be able to claim a short from the sale up to the amount of the lien for which they advanced provided they obtained title insurance. 

Dion raised an excellent point (you are good, sir!)

Is the $14,000 superior position judgement folded into the foreclosure (from a purchasers perspective).  In other words, does the purchaser have to pay off the $14k judgement in addition to their bid on the property?   Have to go back and ask...

Originally posted by @John Barry:

Can anyone tell me is there a way to find out the mortgage / loan Out Standing Balance on the property. it's easy to know the Loan amount issued. but what about the remaining balance? that should be an important factor on decision making?

John, I've asked the same question on the following thread and got some good responses:

http://www.biggerpockets.com/forums/41/topics/1964...

The short answer seems to be "no" but please do let us know if you find a way...

I would love to sign a petition to a bill/law which would release mortgage payoff information to licensed authorized parties such as investor LLCs or real estate agents.  I just don't think that there are enough investors in the country which could form a critical mass to push such a bill through Congress.

Originally posted by @Bill G.:

I would agree with you Bill.  As long as I see a Deed transfer from one unrelated party to another (usually the foreclosing party) it can be assumed that the lender did a full title search before issuing a multi-$100,000 loan.  It it an assumption?  Yes, but a reasonable one.  I did purchase a property recently which had a un-satisfied Deed of Trust which went back before the last arms-length Deed transfer (2 owners prior).  My title company caught it, called the lender of that Trust but was unsuccessful in reaching them (they went out of business).  We were able to proceed with my purchase due to the inactivity of the lender of that trust and the title insurer willing to insure title over that hiccup.

Here's a cool and interesting case that is happening tomorrow in Virginia:

I'm looking at a property going to foreclosure which was purchased in 1998.  Married wife/owner has satisfied multiple trusts and now has a 2008 1st Trust being foreclosed upon tomorrow.

Due diligence has uncovered a $14,000  Hospital Judgement docketed on 2006 (so having priority over the current, foreclosing, 1st trust)

BUT... the judgement does not have any address associated with it (found it under the owners name).  

 AND the judgement lists both the husband and wife's name as defendants.   Husband is not on the deed to the property - just the wife (as married, party of the second).

1. Does the judgement attach to the property even if the address is not specified?

2. If it does, is it 50% of the amount of the judgement, or the whole enchilada?

3. Is it true that judgments have an active "shelf-life" of 10 years, barring any renewal recordations? Or do they remain active forever?

Thanks!

Originally posted by @Dion DePaoli:

Cleaning up some thoughts on this matter.  

@Dion,  OUTSTANDING contribution!!  Thank you sir!   That was so good I re-read it thrice.  Something "clicked" when you stated

"The two parties, the auction bidder and the lien holder are not acting with the same intentions."

To add, in another thread with a similar topic @Brian Burke had this to say:

Originally posted by @Brian Burke:

 Beware that after the mortgage crises some lenders didn't enforce their loans for YEARS so I've seen first loans with several hundred thousand in back payments that you would also have to pay. Beware.

I suspect this is whats driving the frequency and stratospheric heights of 1st note increases.  Combining discussions from other threads, investors, and forums I've summed up, in order, what I now believe is making a note payoff higher than its origination:

1. Defaulting payments & Foreclosure Legal Fees  -  still the most common scenario resulting in small to moderate increases over the original recorded note amount.

2. Non-Enforcement of Loans  -  "probably" second most common.  Resulting from lenders hitting the pause-button during the robo-signing/mortgage crises in an effort not to get sued by borrowers who were victims of either predatory lending practices or illegal foreclosure proceedings (robo-signing).  Coincides perfectly with the outrageously increased 2005-2009 notes I'm seeing hitting the auction block.

3. Re-Capitalization on Negative Amortized Loans - could run the gambit from low to outrageously high increases in the note.  Probably more a rarity but certainly thrown into the mix.

4. #1 + Legal Fees Associated with Clearing Up Title --  probably the least common.  Where owners/mortgagees file for bankruptcy, lis pendens, or otherwise intentionally cloud title in an effort to prolong the foreclosure process as much as possible.  Accruals = Legal Fees + Prolonged Time owners aren't paying their mortgage.

That taps me out, unless someone has another idea to add to the list....

Thanks to everyone for an awesome, intelligent, high-level discussion!  It truly shed some light into the dark corners of my knowledge.

Originally posted by @Brian Burke:

@Rodney D., that's funny...I missed that thread but I just scanned it.  Just a heads-up, the refusal of first lienholders to disclose the balance due isn't anything new.  I've been doing this for 25 years and I've never (even way back then) been able to get a lender to disclose the outstanding balance on a senior lien prior to owning the property (talking in terms of an acquisition at a trustee's sale).  In a conventional sale, the borrower is asking for the payoff balance and then giving it to the buyer (via escrow).  In a trustee's sale, the borrower isn't going to do you any favors. 

Back in the day, I used to just add 6 month's worth of payments to the original balance to get an approximation.  That was, because back then lenders would foreclose if you missed more than three payments.  These days, you see loans that haven't been paid on in five years and the lenders still haven't filed a notice of default.  It makes the acquisition of properties at trustee's sales of second liens a very risky business.  One that even a seasoned veteran like myself isn't willing to stomach in most cases.

Brian  -- thank you again!  Its SO very refreshing talking with you and getting straight, experienced, answers, from someone who has/is experiencing the same situation!  I feel a little like Forest Gump... "mama always did have a way of explaining things so I could understand 'em"  lol.   I had feared I was missing something other investors knew but kept to themselves.

I recall trustees back in the 80's actually announcing the payoffs of the 1st in an effort to help us investors out.  I've been told they stopped this practice due to some disgruntled investors trying to wiggle out of a bad property purchase after-the-sale by claiming the trustee mis-represented the payoff figure.  In response, trustees don't say anything now.  Bad apple spoils the bunch scenario.

Originally posted by @Justin Ashton:

I think the new SF ordinance on short-term rentals (Airbnb law) that went into effect on Feb 1, 2015 will limit the impact that Airbnb will have on condo/apt prices in SF going forward. The very poor growth of supply of new housing in SF and new *highly* paid young workers moving to SF in the tens of thousands are the real drivers of price increases. 

Here's a long-winded rundown since I just looked into the new Airbnb law:

Thank you for this Justin!  Could be a model for other cities across the country.

Do you know if this just applies to SF or does it stretch to Marin or Sonoma too?