All Forum Posts by: Patrick Desjardins

We did a deed-in-lieu of foreclosure with a cash-for-keys. The rookie attorney gave her the money before we had time to inspect the property. 

You see where this is going. Of course, they left with the outside AC unit and broke the central air upstair trying to reach the water heater, which they also stole. And we PAID THEM to do so..

It's hard to tell without knowing which website you're talking about, and there can be many reasons. 

- They could want too much for it. There's an expression in the note space that there are no bad notes, just bad prices.

- The collateral might not be complete.

- The seller may be unresponsive. (is it a company's website or an exchange like FCI?)

- Going back to them wanting too much for it, they may be using an AVM number that is way off and anyone doing basic due diligence knows it. (ie they claim the house is worth 200k and has equity, but it's obviously worth 150k and underwater)

- CT isn't in most people's top 5 for a few reasons. First you don't see that many notes from there as opposed to midwest and south east states, and second, north eastern states usually scare people because of taxes and liberal courts.

- They could have found a buyer and then he backed out, which happens.

You would have to be more detailed but these are a handful of basic reasons why some notes sit.

Luis, judging by the people who have bid on my foreclosure sales.. it seems like the experienced guys have someone that run title on the properties they are interested in.

The problem is each county is different, so you have to figure out how your county is. For example in my county the records aren't even electronic. So when I've gone to local foreclosure auctions, I went to the register of deeds' office and looked through the books to see the liens attached to XYZ house. It's not that complicated, but if you don't know how to do it would be better if you made friends with a local closing agent who can teach you, or that you can pay to do it for you. The issue is it's going to add up because you're not going to win a lot of the auctions, especially if the reserve bids aren't announced in advance.

For the taxes, obviously you go to the tax collector's website / call their office. Make sure to check both city and county, a lot of people forget that a lot of houses are double taxed.

 Aside from talking with other note buyers (residential) I don't think you would get much out of NoteExpo.

One thing I'm curious about, and never asked my accountant is.. If you own the note for over a year and then it turns into a REO. You fixed it up and sell it in 2 months. That would still be capital gain since you owned the asset for over a year, and the REO was just a different stage of the process. Right? As opposed to purchasing a house to rehab.

Ehhhh. I am not a CPA, but your basis would be what you paid for the note, not the UPB. In this case 300k - 200k - your expenses. You didn't lose 200k, the seller did, and they would be entitled to count it as losses.

Someone correct me if I'm wrong but I doubt it.

Pass, this sounds like a terrible deal unless I'm misreading it. 200k value and 168k UPB, that means if you had to foreclose (which sounds likely if the guy can't get a loan) then you will at best break even. And Florida's foreclosure can take 12-18 months, perhaps more if it's contested.

But for the sake of discussion.. What is your thought process on why you are considering this deal? Is he giving you a discount on the 168k note?

Yes, Andreas nailed it. 

But just to make sure.. Do you know if they are current on their first mortgage? If not, they may owe thousands (or tens of thousands) more than you expect the first mortgage to be. Since you would like to pay off the first, make sure you also check for liens and taxes owed.

I filter everything that I'm not interested in, because researching 10 notes is a lot more manageable than 100 notes.

Sandy,

Why didn't you ask us beforehand :/

It's pretty obvious that there is miscommunication between you and the other party. You realize that not all notes are secured right? 

For example I could lend you $1,000 and have you sign a promissory note, which would not be recorded. From your message above it sounds like you're lending for the repairs, not for the purchase of the house.

Are you 100% sure that you've agreed on a mortgage? Just because you add a title that says "Mortgage" on top doesn't make it so. And if so.. why the hell would you not have your attorney/closing agent run through it with you.. I lent my best friend some money to buy a fixer upper a few months ago and still had it run through a real estate attorney, because even though I trust him, what if he gets hit by a bus and can't pay me back?