All Forum Posts by: Steven Goldman

I am not qualified to comment on personal investment strategy. But I can comment on the current real estate bubble and the cycles during my lifetime. Over the years when we are in a hyper inflationary real estate bubble the smart multiple door investors sell their inventory when they believe the bubble is near bursting. Most of those investors were seasoned and middle aged. So, I believe that the decision to sell or not, depends on your age and future plans. All of Bret S. comments are relevant and should be considered. 

I would not take a HELOC against the equity. This could put you in a precarious position when the bubble bursts. Among the many real estate hats I wear, or have worn is negotiating short sales and loan modifications. In 2008 when the last bubble burst, the multiple door investors who overleveraged against equity, were my best customers. All lost some, many lost everything.

Yes, the loans would be 30 years fixed. Unless you want to go 5-20 higher payments less interest. Turn around time for these loans depends on the appraisal work load in the are the property is located.  

I have read the numerous responses to your post and I can add the following information for you to consider:

Who is a “Foreclosure Consultant?”

California foreclosure fraud laws are designed to prevent persons from acting as a “foreclosure consultant” to take advantage of distressed homeowners. Thus, a key provision of the law is that it applies only to those who are acting as a “foreclosure consultant.” According to Civil Code 2945.1(a), the term refers to any person who represents that, for a fee, they can perform any of the following services:

1. Stop or postpone the foreclosure sale;
2. Obtain any forbearance from any beneficiary or mortgagee;
3. Assist the owner to exercise the right of reinstatement;
4. Obtain any extension of the reinstatement period;
5. Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained that deed of trust or mortgage;
6. Assist the owner to obtain a loan or advance of funds;
7. Avoid or ameliorate the impairment of the owner’s credit resulting from the recording of a notice of default or the conduct of a foreclosure sale;
8. Save the owner’s residence from foreclosure; or
9. Assist the owner in obtaining from the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, the remaining proceeds from the foreclosure sale of the owner’s residence. 1

Note, this definition is applied to both those who provide legitimate foreclosure advisory services as well as those who do so for a fraudulent purpose. It is only if the foreclosure consultant fails to follow the legal procedures for engaging in this business that he or she can become entangled in a criminal case.

What is Foreclosure Fraud?

Under Civil Code 2945.4, it is a crime to do any of the following acts in a capacity as a foreclosure consultant:

1. Charging or collecting any compensation until after the foreclosure consultant’s work has been completed as agreed to in the contract;
2. Charging or collecting interest or fees in excess of 10% per year of any loan the foreclosure consultant may make to the owner;
3. Taking an interest in other property or a lien against the wages of the owner;
4. Receiving payments from any third party for these services without full disclosure to the owner;
5. Acquiring any interest in the owner’s residence in foreclosure;
6. Taking any power of attorney from an owner for any purpose;
7. Inducing or attempting to induce an owner into a contract that does not comply in all respects with Sections 2945.2 and 2945.3; or
8. Entering into an agreement at any time to assist the owner in arranging, or arrange for the owner, the release of surplus funds after the trustee’s sale is conducted, whether the agreement involves direct payment, assignment, deed, power of attorney, assignment of claim from an owner to the foreclosure consultant or any person designated by the foreclosure consultant, or any other compensation. 2

Prosecution of Foreclosure Fraud Under Civil Code 2945.4

The crime of foreclosure fraud is similar to that of the crime of theft by false pretenses. A “false pretense” is any act, word, token, or symbol that is intended to deceive another person. In both crimes, the perpetrator intends to deprive the alleged victim of his or her property by tricking the victim into giving possession and ownership rights to that property to the perpetrator (or someone else). The property can be money, labor, personal property, or real property.

In order to be convicted of foreclosure fraud, the prosecution must prove beyond a reasonable doubt the following elements:

1. You knowingly and intentionally deceived a property owner (or the owner’s agent) by fraudulent representation or false pretense;
2. You did so intending to persuade the owner/agent to let the you (or another person) take possession and ownership of the property; AND
3. The owner/agent let you (or another person) take possession and ownership of the property because he or she relied on the representation or pretense.

In order to prove the element of false pretense, the jury must find that one or more of the following is true:

(A) Either a false writing or false token accompanied the false pretense;

(B) There was a note or memorandum of the pretense signed or handwritten by you; OR

(C) Testimony from two witnesses or testimony from a single witness along with other evidence supports the conclusion that you made the pretense. 3

Punishment for Foreclosure Fraud

Violations of Civil Code 2945.4 are “wobblers,” which means you can be charged with either a felony or misdemeanor. In the case of a felony, you face a sentence in county jail of 16 months, two or three years, and a fine of up to $10,000. If convicted of a misdemeanor, the same fine can be imposed, but the jail sentence can be no more than 364 days.

Additionally, there are sentence enhancements available to the court for crimes that exceed certain dollar amounts. If the homeowner was defrauded of more than $65,000, the court may add an additional sentence of one to four years in state prison. 4 If the homeowner was deprived of more than $100,000, and you were also convicted of two or more felonies in the same criminal proceeding, the sentence may be increased by up to five additional years, and a fine of either $500,000 or double the amount that was taken (whichever is greater) may be imposed. 5

Finally, the court may also order restitution to be paid to the victim, and if you have a professional license (such as a real estate broker or an attorney), you may be subject to additional sanctions from the licensing board, including suspension or revocation of your license.

So you may not be guilty of foreclosure fraud as defined in California's foreclosure law but your squatter/prior owner will make it look like you took advantage of her and it may be an appealing argument to a Judge or jury. My recommendation is to wash your hands of this as quickly and cheaply as possible. You are entitled to make a great deal, but it may not pass the smell test of judicial scrutiny on a equity basis.  Throughout my career as a lawyer, real estate investor and banker I have had a hard and fast rule, if a deal went bad I would move quickly to mitigate the problem and move on. This my friend looks like one of those situations. I really do wish you luck, 

This sounds like a first year law school real property law scenario.  I suggest you get good advice from a licensed California lawyer and then follow it. Every jurisdictions is differed when it comes to evictions for any purpose. It seems as though you were defrauded and that she planned this from the beginning.  If some one wanted this property I would sell it in a heart beat. Otherwise prepare for legal pain. Her defense to your eviction is fraud and that will  likely bog down your landlord tenant case for a prolonged period of time and large legal fees.  Run as fast as you can from this deal! Good luck!

Ohio is a great place to invest as the properties are significantly less expensive than many other areas. However, where do you live?  You will find that local banks are often reluctant to lend money to out of state investors. Many local banks limit their geography and customer base to their area. 

It is also important to understand that lower priced properties are often hard to finance. Most funding companies and some banks have minimum loan sizes. You can get a pre-qualification or pre-approval from any legitimate investment loan originator once you have a deal. Many lenders base their pre qualification on debt service coverage. They can not issue a general pre-qualification without knowing the specifics on the property you are trying to acquire. (Rent, price, taxes and insurance) Good luck with all of your deals!

Each State is different. U our home state Pennsylvania you would have your contractor sign a general waiver of mechanics liens and you would have your sub contractors also sign a waiver of mechanics liens. Most lender's insist on the waivers prior to distributing a draw on a fix and flip bridge loan. It insures that the subs will not lien your project if the general draws the money and fails to pay them. Good luck!

You know how to find the skip tracer sites. I recommend you knock on the neighbors door and ask if they know how to get in touch with the family or owner. This works. I know it is uncomfortable but most neighborhoods have a nosey body and if the neighbor does not know they may know who knows. Knowledge is power ad profit.

You should also look on your tax collectors site that may show where the real estate bills are going. You can get the owners name from the recorder of deeds records and than use it to search for estate records. I chase down short sales and loan mods in my spare time and everyone of those techniques has worked at one time or another. A good old fashion door hanger on the property with your name and I want to  buy this house may work.(You can get them printed cheap)  I love real estate! Good luck!

In my 40 years of real estate the one timeless rule: Never let anyone other than a paying tenant under lease occupy after settlement. I would to buy a property that has hold over tenants or squatters. Philly is really a difficult landlord jurisdiction. Not to mention the potential problems with utilities and other services. I would pass and look for a vacant property unless you have a law license and are familiar with Philadelphia's utility and landlord tenant regulations. Too much risk and not enough reward. 

What a great day! In most instances when you finance a property only some of the members of a LLC would be guarantors. Often, it is only one. So the concept is not a failure and mimics what you might find in the financing world.

One of the main issues raised by this scenario is the transfer tax obligations in the State you are buying in. for instances in Pennsylvania you would be required to be 2 percent transfer tax on the transfer to the LLC, 3 percent in Philadelphia. So check on the taxation issue when you transfer from personal to LLC. with new members. Your plan is feasible but watch out for the taxes nd the disputes which might arise from the partnership. I love real estate and G2 Loans wishes you smooth sailing on all of your deals.

What's wrong with it that the attorney is not going to keep the profit? Or is he just a generous egalitarian attorney? If you want to be a landlord than buy and hold. If you get a good return on the cash out so be it. Be aware that their are seasoning rules regarding properties purchased at sheriff sales. Also investigateate the title carefully especially if the foreclosure was by default. Make sure it is insurable. We regularly do cash out refinancing for BRRR investors. Good luck!